HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
Washington, D.C., December 5,1976.
Hon. HARLEY 0. STAGGERS,
Chairman, Committee on Interst ate and Foreign Commerce, "Washington, D.C.
DEAR MR~. CHAIRMAN: The attached report of the Subcommittee on Oversight and Investigations reviews active and passive solar technologies as they relate to today's consumer. In general, the report finds that consumers of active solar equipment require greater protection fr-om, equipment and installation defects. For potential consumers of passive solar, the major problem is effective access to this highly effective energy technology. Unless these problems are effectively addressed, solar energy will make only a modest contribution to 17.8. energy supply in this century.
Sincerely,
JOHN E. Moss,
Chairman, Sub committee on
Attacment.Oversight and Investigations.
(in)

.Many solar technologies have fully demonstrated their technical viability in today's marketplace. Recently enacted tax credits coupled with rising alternate energy costs are expected to motivate a growing number of consumers to purchase solar systems.
But potential solar consumers face important problems as they seek to buy effective, reliable and economical solar systems. The Subcomiiiittee has found that the character of these problenis is largely determined by the kind of system a consumer wishes to buy. Potential purchasers of active systems* must exercise care to assure that they get a system which ineits reasonable performance expectations. Potential eonsiimers of passive solar technology" are denied effective access to this important energy technology.
The potential active solar consumer is presented with a number of Federal financial incentives to purchase an active system. Demonstration grants and tax credits are expected to result in the installation of active systems in 21/2million homes by 1985. But consumers cannot assume that government financial support of active solar means that they can purchase such systems with the confidence they routinely enjoy when buying washing machines or air conditioners. Data on active solar water, space, and pool heating systems installed in several areas of the country reflect an unacceptably large number of problems. While it can be expected that solar designers, manufacturers, installers and government project managers have learned from these experiences, there is no immediate assurance that these problems cannot recur.
These problems with active systems present significant challenges to both 'government and consumers. For government, effective consumer protection mechanisms must be developed with all practical speed. Failure to do so risks injury to an increasing number of consumers as well as retardation of the deployment of solar technology. As in*In an active system, pumps or fans drive a working fluid through the system to produce useful heat or work. These devices have been employed to heat water and interior living spaces. With the incorporation of sophisticated heat engines, they have also been used to cool buildings.
**Primarily used for space heating, typical passive solar Installations involve greenhouses and orientation of substantial glazing to the south. To store solar heat for use during evening hours, thermal masses, such as masonry or containers of water, are incorporated into passive building designs. These systems are "passive" because no mechanical equipment is required to make them operate.
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dilated by the initial disappearance of heat pumps during the 1950's and early 1960's, important energy technologies can be lost for significant periods if initial consumer experiences are bad. Simply put, if the first family on the block has a bad experience with solar, it is unlikely that other systems will soon be installed in that neighborhood. This would be unfair to that first family as well as a Nation that is seeking to minimize its dependence on expensive, insecure supplies of foreignoil.
Specfic challenges face government in the areas of solar standards, warranties, and demonstrations. Current efforts and needed initiatives with respect to these matter's are discussed in separate chapters of this report.
For individual consumers of active systems, the immediate problem is to assure themselves that they are getting systems which are worth the money. Such systems are available and they can yield impressive. savings on utility bills." But while government and the youthful solar industry develop controls on poor equipment and installations, the best advice to a consumer is to "...educate yoursel f know what you are doing, and work with familiar pople."1 2 A separate chapter of this report reviews the steps consumers can take now to help them make good on the promise of active solar technology.
Passive solar consumers face very different problems. This technology is only now beginning to take its proper place in Federal solar planning. Relatively simple and inexpensive, passive designs could be economically incorporated into a large number of residences and commercial buildings.
What this technology could mean to an individual consumer is suggrested by the home of D)r. D~ouglas Balcomb in Santa Fe, New Mfexico: electric baseboard heaters supplement his passive system and assure that inside temperatures never fall below 65 degrees. Despite below f reezing temperatures outside, Dr. Balcomb's electric bill foir auxiliary heat last winter, for the whole winter, was $38. In addition, lie burned half a cord of firewood.3
But most consumer's will not be, able to take advantage of passive solar in their homes or places of work unless certain st-eps are taken now. The lack of easily available technical information and simple design tools currently limits passive solar to government laboratories and a small number of custom homes. Useful design and performance data must be developedd and made available to the small contractors who build most of the Nation's residences and small commercial structures.
A lack of Federal tax and other incentives for expenditures on l)assive systems (discriminates against passiNe solar consumers. While generally more cost effective than active systems for space heating applications, Federal tax credits are not extended to many passive. systems. In the words of Congressman Gor-e :

It appears in summary that we give tax incentives to the leatu4 cost effective forms of solar energy (for space heating and cooling) and wve denty tax inlcentives to the most cost effective formi of solar energy. This imbalance is a major problems. If allowed to continue, it could significantly distort Amierican solar development.
Thle underlying premise of this report is that solar technology is ready for widescale consumer use. However, a significant increase iii the use of solar energy is not assured. Government must act expeditiously to protect consumers from shoddy equipment and poor IIIstallations. Consumers must recognize that for a while they must exercise some care in purchasing active solar systems. Government must move ahead with programs which give consumers effectiv-e access to simple, passive solar technologies.
The Nation is poised to dramatically expand its use of solar energy. The actions we take now will largely determine the extent to which we can make good on the bright promise of solar technology.

CONCLUSIONS
The Subcommittee has drawn the following general conclusions:
(1) If properly designed, manufactured, and installed, many
solar techiiologies are mechanically and economically feasible
today.
(2) A significant number of design, manufacturing, and installation problems have been experienced by active solar space and
water heating systems, particularly in residences.
(3) These problems have afflicted both federal solar demonstration. programs and solar consumers in the private sector.
(4) These conclusions are particularly disturbing because the
Federal government is encouraging consumers to purchase solar systems. Moreover, while there has been some effort to develop solar consumer -protection mechanisms, a workable consumer protection plan does not exist.
(5) If the problems with solar systems are not sharply reduced,
the popularization of solar energy could be set back for years.
This would run counter to our national goals of reducing dependence on foreign sources of energy and improving the environment.
.(6) Government programs have seriously underemphasized passive and lower cost active solar applications, which are the most cost effective and least mechanically troublesome of existing, comnmercially available solar technologies. This problem has been recognized, however, and some efforts have been made to correct the
imbalance.
(7) Overall, DOE's solar demonstration efforts are still heavily
weighted in favor of more expensive, less cost effective active solar systems. The DOE solar budget also over-emphasizes large, cent ralized technologies.
(8) The Federal agencies involved in solar energy, particularly
the Departments of Energy and Housing and Urban Development, must rapidly and meaningfully summarize the problems encountered in solar demonstration projects and effectively disseminate this data to builders, contractors, installers, building code officials, and prospective solar consumers throughout the country. Absent

4

such a program, any boom in solar installations created by tax credits or other incentives in the National Energy Act could backfire if consumers continue to experience large scale problems.
(9) In addition to disseminating the technical lessons learned
from solar demonstration programs, a massive coordinating job faces the Federal solar bureaucracy. Research and development programs must be closely linked with demonstration and comnmercialization efforts not only among several agencies in Washington, D.C., but verticall1y down through the regional solar energy research institutes, the states and local authorities.

RECOMMENDATIONS
The Subcommittee makes the following recommendations:
(1) Problems confronted in Federal solar demonstration programs should be identified and this information made available to
the solar industry and consumers.
(2) Consumers and small business representatives should be
provided travel funds and modest honorariums if required to assure that these interests effectively participate in the development
of solar standards.
(3) The Federal Trade Commission should expedite promiulgation of a Trade Regulation Rule providing minimum due prces
guarantees to those affected by standards.
(4) The Internal Revenue Service should take steps to provide
that appeals by solar manufacturers f rom determinations that their equipment does not qualify for Federal tax subsidies are
judged as rapidly as feasible.
(5) Rating and labeling standards must disclose any weaknesses in the data being presented.
(6) Every effort must be made to assure that standards do not
unnecessarily limit consumer choice with respect to simple, low
cost solar systems.
(7) Federal programs to train solar installers and inspectors
should be continued and expanded.
(8) Short term warranties on equipment and installation should
be required as a condition to qualification for the Federal solar tax credit. Longer term warranties, those in excess of one year.
should be studied immediately to determine their costs and
benefits.
(9) Warirantyv assu;irance programs should received firthier
evaluat ion and support.
(10) The Federal Trade Comm ission should prom ul gat e a rra de
Regulation Rule to control the sales claims of certain elements of
the solar industry.
(11) Provision of maintenance and operating instructions
should be required as a condition to qualification of a solar system
for the Federal sola r t ax credit.
(12) Performnance -and design information about passive solar
technologyv should be developed and widely disseminated to archlitects, bii ilders, local governments, and consumers.

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(13) Office of Management and Budget limitations on tihe acquisition of data needed to oversee Federal solar Iprograins should be lifted with respect to (questionnaires whichl see-k information on market conditions and other essential data.
(14) Federal solar tax incentives should be extended to all of the passive solar technologies which are ready for consumer use.
(15) Consideration should be given to innovative mortgage instruments for passive solar buildings.
(16) The draft Domestic Policy Review, to the extent it is to be used as a solar agenda for the Federal government, should be recast to appropriately deal with consumer protection problems and passive solar technology.
(17) A single contact point should be established to help all interested parties deal with the current complexity of the Federal solar bureaucracy.
(18) Organization of Federal solar programs should be improved.

A. OVERVIEW
,A significant number of problems have been reported by several sources in the operation of active solar systems installed in residences. Most of the installations are hot water, space heating, or a combination of the two. These systems are considered the most technologically and economically suit able for current residential and comnmerci al app lication. Water and space heating systems are also the most likely to beefit from the recently enacted Federal solar tax credit. If sales of these systems are stimulated by the tax credit or other Federal loan or purchase actions, by higher energy prices or other factors, and system purchasers continue to experience a significant number of problems, the impetus for rapidly expanded solar energy use is likely to be 1)1unted.
The reported problems were primarily experienced in the last three years and reflect experiences in several parts of the United States.

B. THE -NEW ENGLAND EXPERIMENT
The New England Electric System (NEES) began a solar water heating experiment in September 1975 to test the performance of commercially available solar water heaters. The utility wanted to see if solar hot water heating could aid in leveling peak electric power demand. By December 1976, nearly all of the 100 test units were installed in single family homes in Massachusetts, Rhode Island, and New Hampshire.,5
Problems were encountered immediately. According to an October 1977 study of the experiment by Robert 0. Smith and Associates, a professional enginee ring firm from Newton. Massachusetts: "results are still undetermined about demand peak effects because so much difficulty was encountered in the mechanical functioning of the solar water heaters."
The report concluded that only 15 of the 100 systems had functioned well. The other 77 systems had at least one major stoppage that required a technician to repair. Out of these 77, 20 had severely inter'rupted and unreliable service, and 23 had very low or no energy savings.
Average energy savings during the first year for all 100 systems was under 20 percent. Although the best 15 systems reduced water heating energy consumption by an average of 37 percent in a severe winter, this was not high enough to be economically attractive. The worst 15 systems averaged less than five percent savings. Some systems were made to work well after major modifications, but the budget
5 For New England Electric System data including the observations of the engineering firm of Robert 0. Smith & Associates, see, Actire Solar Heai-ings, Tr. at 103 et seq.
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for the experiment, originally set at $250,000, nearly doubled.
According to the consulting engineers:
Most of the troubles encountered in this project are due mainly to flaws In installation, secondarily to flaws in the selection of component sizes and types, (and) thirdly to lack~ of inspections and adjustments which are necessary after installation. Some problems can be associated with generic types of sse.
According to Jack Mleeker, Manager for Consumer Projects of the NEES, the second year of operation produced much better results. The 15 best systems are now saving consumers about 55 percent of their hot water heating bills. The worst 15 systems are saving approximately 20 percent. M r. Meeker estimated that the 100 systems will average about 40 percent energy savings. However, the improved results were achieved only after the solar manufacturers and contractors either replaced or made major modifications to 72 of the 100 systems.
According to the study by ]Robert 0. Smith and Associates, the following problems were encountered during the first year of operation:
Component: Number of problems
Collectors---------------------------------------------------- 23
Piping ------------------------------------------------------ 60
Valving------------------------------------------------------ 21
Tank, heat exchanger, electric heater------------------------------ 7
Dump or blower and motor ------------------------------------- 20
Controller---------------------------------------------------- 33
Miscellaneous------------------------------------------------- 1
While the average system savings may become economically attractive. to consumers in the NEES service system as early as next year,7 the method of wholesale system modification or replacement is obviously not a realistic alternative for the individual consumer even if hie or she were willing to wait several months or years while the system was made to work properly. The importance of correct total system operation was emphasized by Mr. Meeker:
[Ilf you have purchased a $2,500 system installed, and you have a $40 or $50 pump malfunctioning, and'you do not know about it, that is going to negate any savings that you could expect to receive from solar."
C. FLORIDA SOLAR ENERGY CENTER SURVEY
The Florida Solar Energy Center (FSEC), under contract to DOE, identified a number of solar users in Florida and surveyed their experiences. The work was undertaken as a part of an effort by elemneuts in DOE to develop a consumer protection package to support solar demonstrations and commercialization efforts. In April 1978, the FSEC summarized the experiences as reported by 522
-solar system owners. Over three quarters of the systems were installed in 1975 or later and over half were little more than a year old. Virtually all were residential installations and 80 percent were hot water systems. Solar consumers reported a high level of satisfaction with their sy;Nstems: 67 percent were satisfied, only 12 percent were unsatisfied, a1nd 21 per-cent reported having mixed feelings. According to Dr. Yarosh, l)irector of the Energy Systems Analysis Division of the ESEC, it number of the respondents probably shouldn't have been
*Id.
T tiree Srolar sI'lifyl upra note 1, Tr. at 26~ 27. d., Tr. at 20.

9

satisfied. 46 percent of the respondents reported having major or minor problems with their systems. The FSEC estimated that '22 percent had major problems.9
A subsurvey covering 216 of the respondents found that 111 or 46 percent reported that their problems had not been correctedl at the time they were surveyed. It was not clear how long these problems had gone uncorrected, but the FSEC did find that for all respondents most of the problems occurred soon after installation and ov-er 80 percent within the first year.'0
The problems most often reported by consumers in the FSEC surveys were as follows:"1

Number of Percent of Percent of totalI
Problem type times reported total survey problem cases

Dri. Yarosh, notes that the present solar owner is not typical. of the likely purchaser of solar systems for residential use in the next several years. They make allowances for the fact that, they are pioneers in a new energy'application and that errors must be tolerated. 12 Dr. Yarosh believes that the solar industry has not yet penetrated what he thinks will be the average individual for the solar market. Individual residential consumers will account for an estimated 70 to 75 percent of all solar installations through 1990.11 The government must take care to see that this mass market is not discouraged from considering solar energy because of operating difficulties. The success. of solar energy depends on consumer confidence in solar as a viable energy source.

D. DOE-FUNDED SOLAR ENERGY SYSTEMS

Preliminary findings for 40 I)OE-funded solar systems in residenti-al'and commercial. installations are consistent with the NEES and ESEC results. DOE-funded systems, which include both air and water types, have experienced a large number of operating problems: 14

A much more extensive study by DOE, which summarizes 1,100 experiences" reported by architects, engineers, project managers, and others associated with the heating and cooling demonstration p rogramn, was published in preliminary form in July.'5 It is the first comprehensive effort to summarize the actual problems and knowledge gained from the operation of this federally- funded program. As f undamiental as such a compilation would seem, the report 'begins by a admitting that preparation of the handbook was undertaken shortly before four DOE-sponsored regional "Solar Update" conferences "to till a recognized void in information f rom solar demonstration projects." 16 But for the conferences, solar demonstration project
experiences may not yet have been aggregated, even in a preliminary form. The study notes that while HUD provided experiences for inclusion in the study, a complete HUD report on the results of its residential demonstration program, which has many more units than the commercial demonstration program, is not yet available. In another major HUD residential program, the hot water initiative, the Departnient had no plans to monitor the i, sults. This has belatedly been changed, and DOE has contracted with the Northeast Solar Energy Center to instrument about 30 installations in each of the eleven participating states.'17
The DOE commercial demonstration program released its first Program Opportunity Notice (PON) in October 1975. The HUD resi(lential demonstration p~rogr~am got underway a few months earlier. Results are as follows: "I
(September 19781
Type Initiated Operational'1 Instrumented
Commercial projects:
DOE program opportunity notice-------------------------------- 108 25 25
Hotel, motel----------------------------------------------- 37 4 0
Other---------------------------------------------------- 62 14 11
Residential projects:
HIJ--------------------------------6,853 2,657 37
DOD ---------------------------------------------------- 243 4 0
Other ---------------------------------------------------- 3 3 1
Total ------------------------------------------------- 7,306 2,701 74
That is, turned on at least once; this does not mean that unit is currently operational.
The delay in the production of a HUD report may stein from the
very small number of instrumiienited units. Indeed, it is not clear how I LUDI will be able to effectively ineasure actual system performance, identify and tabulate problems and gauge utility savings.
In any event, the I)OE report lists a considerable number of 1)robleins under three general headings: performance and design problems, cost, and financial problems, and m aagmen an oitc problems.
1Each is summarized in table form :

The report observes that the majority of design and performance problems were of a professional design nature and occurred in the final design phase.19 545 separate problems are listed that were discovered in this phase. The report notes that poor workmanship and the more stringent requirements of solar installations compared to normal plumbing and heating practices also contributed to many of the problems. The report identifies cost factors that were occasionally inadvertently omitted in system bidding and design, notes that considerable difficulties, including the propensity to damage collectors, were encountered in shipping system components, and describes some unanticipated problems in selecting and coordinating the several building trades that can be required to install a solar system.
After acknowledging that the heating and cooling demonstration program has provided "a learning experience" to professional architects, engineers, contractors, and tradesmen, DOE promises to publish more and better organized experience data. Such data, it is noted, "may be the most valuable 'product' of the early energy utilization program." 20 The Subcommittee agrees.
Unless widely and effectively disseminated, the practical lessons learned at considerable expense in the federal demonstration programs will be of limited benefit to any surge in solar energy use created in the next few years by the tax credit and various loan programs. Even worse, the failure to communicate these experiences to the rank and file of solar manufacturers and installers could mean that mistakes will be repeated, and that solar will become discredited much as the use of the heat pump was unnecessarily set back by initial negative consumer experiences in the 1950's.2.
E. OVERSIGHT SUBCOMMITTEE SURVEY
The Subcommittee on Oversight and Investigations sent a 77-question survey to 781 solar owners in California, Michigan, and Wisconsin. 336 usable responses were received by the survey cut-off date. Of tlese. 255 were from California,2,'a 21 from Michigan. and 60 from Wisconsin.
Like the Florida study, the Subcommittee found both a high degree of satisfaction and a significant number of problems. For example, over 86 percent of the respondents were satisfied or very satisfied with their systems although over a third reported that the system leaked water or other fluid. The most significant problems are listed below. A tabulation of all the problems is printed as Appendix E.
10 Supra note 15 at 63.
20 Id.
21 Actirc Solar Hearings. supra note 1. Opening Statement of Honorable John E. Moss. : As a condition to eligibility for California's 55 percent tax credit. solar suppliers must now provide minimum warranties and comply with other requirements. The effect of these .ligibilltv criteria cannot he assessed from this data because systems surveyed in the Subemmittee questionnaire' were generally purchased before these requirements were imposed.

Since, liquid systems use water or other fluid as the heat transfer matter, leaks reduce the effectiveness of the systems. Likewise, water condensed inside the collector limits the, amount of solar energy that can be absorbed through the transparent collector face. Inefficient con-' trollers can cause the system -not to run when it should, which reduces Solar energy collected during sunny periods.
Installation problems such as leaks, loose joints, or mounting and even house damage stand out clearly from this survey. The controller is also a major source of system malfunction although it is not clear whether this is due to improper installation, poor system design, or badlv manufactured control devices. Another finding that appears to further underscore problems in the commercial solar installation industry is that the persons who did the installation themselves reported fewer problems than those who'hired professionals to do the job. It may also be true, however, that tlie do-it-yourselfers took more time or did not count initial inistakes. For nine of the ten types of problems listed above,, the. do-it-yourselfers reported fewer problems (see Appendix E for a comparison).
Whatever the exact cause of manifestation, the. absolute number of solar system owners who experienced problems with some regularity vas disturbingly high.
Equiptnent problent frequency
Valid answers ------------------------------------------------------ 314
Never (41.5 percent) ------------------------------------------------- 131
Seldom (39.9 percent) ------------------------------------------------ 126
Occasionally (12.0 percent) ------------------------------------------- 38
Frequently (3.8 percent) ---------------------------------------------- 12
Always (2.2 percent) ------------------------------------------------- 7
While. over 40 percent had fortunately never had equipment problems, 18 percent had suffered such problems at least occasionally. In cases where system owners had hired someone to install the system within the last three years, the figure was even higher-19.4 percent. Nforeover, these figures mus.t. be considered minimums because it is highly likely that system owners are unaware of some problems. There are even a few instances of system owners being unaware that. their systems were totally nonfunctioning.22 Since, most solar systems have automatic back-up systems, the solar owner often gets hot water from the tap or heat from the duct without being certain of the energy source. Few solar systems have the instrumentation necessary to show the exact contribution of solar energy to hot water lieating, for exam22 Subcommittee staff interview with Dr. Yarosh, May 1978.

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pie. The hot water heating system may have a red light that indicates when the pump is running, but this does not mean that the system is producing all or any of the owner's hot water requirements. The addition of expensive instrumentation as standard equipment on a solar system would increase initial system cost, which is already a serious commercialization barrier, and would increase already lengthy eco nomic pay-back periods.
.A note of caution must be added to the above assessment of solar stem problems. Since the majority of the solar system covered by teSubcommittee survey are only a few years old or newer, the types problems that would most logically be reflected are of an installation and system design nature. The Subcommittee survey should not be taken as a good indication of system or component durability, which results can only be obtained after several more years of operation. Moreover, the survey data was mostly reported by solar system owners, few of whom are likely to be solar engineers. Thus, while the results can be used to illustrate trends and major points, the reader is cautioned against over reliance on the data.

CHAPTER2.-SoLAR STANDARDS, CODES AND CERTIFICATION
1. PRODUCT STANDARDS
A. Overview
Product standards are a traditional way to assure minimum levels of product performance, safety and reliability. For the emerging solar industry, standards can be a blessing or a curse.
Standards which effectively shield consumers from shoddy products and inadequate installations would be a boon to the industry. A high level of consumer confidence would largely guarantee sustained high levels of industry growth.
But if standards are too rigid or rigorous, technical innovation may be substantially slowed. Superior, though non-conforming, products could be permanently excluded from the market to the extent that compliance with a standard is required by law or market pressures. In the rapidly evolving solar industry, limiting technical innovation is not in the interest of consumers.
To help assure that solar standards are neither too loose nor too rigid, several related strategies are emerging. The first is to substantially rely upon the voluntary consensus process for the development of solar standards. This process theoretically involves all of the parties interested in a product, manufacturers, small business and consumers, in the development of a standard. These interests are expected to reach consensus on a standard which does not unduly restrict industry while still protecting consumers.
The second strategy is to generate standards which allow broad latitude in the designs which will comply with their terms. Performance standards are preferred over prescriptive standards. For certain key product attributes like thermal performance, the trend is toward standards for testing and labeling rather than pass/fail levels of performance. An adequate full disclosure approach to such product attributes is the least likely to prejudice new or cheaper technology.
Each of these approaches to the development of solar standards has weaknesses which must be recognized and addressed. Significant reliance on consensus standards requires government to carefully monitor that process. Consumers and small businesses must effectively participate in the development of standards. Disclosures must be full and fair. Where data is soft, consumers must be made aware of the utility and limitations of the data being provided. R. Current standards
The Solar Heating and Cooling Demonstration Act of 1974, P.L. 93-409, required the development of interim performance criteria for solar heatmig and combined heating and cooling components and systems in residential dwellings. Section 8 of the Act also made provision for the development of more definitive performance and testing criteria based on the experience that would be gained during the demon(17)

18

stration program. Currently HUD and DOE, with the assistance of the National Bureau of Standards and the National Aeronautics and Space Administration, have developed interim standards for solar heating, hot water and heating and cooling systems.
These solar standards have been incorporated into HUD's Intermediate Minimum Property Standards which regulate homes financed by the Federal Housing Administration or the Veterans Administration. In addition, systems receiving grants under either HUD's Hot Water Initiative or the commercial solar demonstration program must comply. In all, perhaps 20 percent of solar consumers are covered by mandatory Federal standards.23
In addition to the standards developed in accordance with P.L. 93-409, several standards have been issued by private standards development organizations. The American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) has developed test standards for the determination of the thermal performance of solar collectors (ASHRAE 93-77). This test protocol is relied upon by government and industry. In addition, ASHRAE has developed a standard for thermal storage devices (ASHRAE 94-77). The Sheet Metal and Air Conditioning Contractors Association has developed an installation standard for active solar systems. The Air Conditioning and Refrigeration Institute has issued a standard procedure for rating, labeling and certification of collectors.24 It is expected that this standard will sooin be made obsolete by standards now nearing completion. A rating, labeling, and certification procedure for solar collectors being developed by the Solar Energy Research and Education Foundation (SEREF) is expected to be. substantively complete by the end of 1978.
These standards are far from comprehensive. Neither reliability nor durability test standards for collectors have been generally agreed to. After these are developed, a rating and labeling standard could rapidly follow. System standards for thermal performance or reliability are not expected for some time.
Under the leadership of the American National Standards Institute (ANSI) working with the National Bureau of Standards, a division of labor and timetables have been established for necessary standards. To date, standards have been developed at an almost unprecedented pace. But the lack of key standards such as those on reliability indicate that this pace must be continued and accelerated.
At least five states, including California and Florida, have developed or are developing standards for use within their borders. In California, standards will determine eligibility for a significant 55 percent solar tax credit.
Despite this growing body of public and private standards, the prospective solar consumer without an engineering background is still hard pressed to know what to expect when a particular solar system is installed on his or her home. As summarized by Dr. Yarosh : We have found no coherent program in place that ;ufficiently informs and educates the potential consumer about iear term technology * That is an enormous challenge. Nonetheless, we do not belivvc wNe have an effective and coherent program.
"' A ('tive ,olqr llc!rins, suprui note1 1, 'r. at 154. (1 Tr. at I .
1d., Tr. at S 6.

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C. Problem with the private coflsemlu8 process
Most product standards in the United States are developed through the voluntary, consensus proess. This approach seeks to involve industry, design -professionals, consumers and other affected groups in the development of a standard. In theory, all groups must not only be heard, but their legitimate concerns imist be recognized and resolved in a satisfactory manner.
Solar standards developed through this process are expected to be incorporated into HU D's Intermediate Mininum Property Standard and the criteria for receipt of the Federal solar tax credit .26 According to Mr. Carl Conner, Program Manager for Standards, Codes, Testing and Certification at IDOE, "as new consensus standards come along, we will be adopting those. 1 27
In effect, significant Federal benefits will be premised upon private standards. The importance of Federal tax credits to solar sellers is difficult to overestimate. The recently enacted Energy Tax Act of 1978 [P.L. 95-618], provides a tax credit for expenditures on any qualified "Renewable Energy Source" to the extent of :
(a) 30 percent of so much of such expenditures as does not
exceed $2,000, plus
(b) 20 percent of so much of such expenditures as exceeds $2,000
but does not exceed $10,000.
A $2,000 system which meets "performance and quality standards" prescribed by the Secretary of the Treasury, in consultation with HUD and DOE, would cost the taxpayer $1,400. A $5,000 installation which conforms to these standards will cost a taxpayer $3,800.
For -most solar manufacturers, failure to qualify for this credit will mean failure in the marketplace. As a consequence, the private consensus standards which will determine which systems qualify for the credit are of paramount importance.
Such reliance on private, consensus standards takes place at a time when there is growing debate over the private standards development system. It has been argued that private standards protect industry. not consumers. In some cases that is true. Ralph Nader has pointed out that certain lighting levels set by the Illuminating Engineering Society (JES), the trade organization for the lighting industry, are far above what is considered appropriate by opthalmalogists.28 Such standards also often lag woefully behind the times. For example, it required eight years for a committee of the American National Standards Institute (ANSI) to approve an automatic flue damper for gas furnaces. This innovation can cut gas consumption in furnaces by as much as 23 percent.
Consumer advocates, academics, and recently the Federal Trade Commission have attributed such problems to inadequacies in the processes used to develop voluntary consensus standards.29 While the
"0 Id., Tr. at 639.
2? Id., Tr. at 639.
28 Hearings on 5. 825 Before the Subcomm. on Antitrust and Monopoly of the Sen. Comm. on the Judiciary. 95th Cong., 1st Sess., April 18, 1977. Statement of Ralph Nader. 29 P. Maier & R. Nader, "The Case for Reforming Our Standards-Setting System", New Engineer Magazine, Jan. 1978. David Hemenway, "Remarks". The Solar Market: Proceedings of the Symposium on Competition in the Solar Energy Industry, Federal Trade Commission, pp. 88-90. Standards and Certification: Proposed Rule and Staff Report, Bureau of Consumer Protection, Federal Trade Commission, September 1978, Vol. 1.

20

anti-trust laws impose certain due process requirements upon standards development," anti-trust litigation has proved to be a clumsy and ultimately ineffectual way to enforce these requirements.3'
To address this problem, the FTC is now developing a trade regulation rule regarding standards and the standards development process. The emerging rule will require adequate notice to interested parties of the subject of meetings; guarantee a right to participate; provide that a standard setter indicate the basis for the standard; provide for appeals of decisions of non-compliance; and establish requirements with respect to the certification of products.31a These basic procedural safeguards should be mandated as soon as practicable.
But two concerns require special attention. The first is assuring effective participation by consumers and small business. Second, care must be exercised to assure that products which are equivalent or superior to those covered by a standard are not frozen out through inertia.
With respect to consumer participation, the Solar Energy Research and Education Foundation (SEREF), in the development of its thermal performance labeling standard for collectors has provided travel funds and modest honorariums to representatives of consumer interests.2 It is expected that the American Society for Testing and Materials (ASTM), with the assistance of DOE, will provide similar funding to consumers in the development of some other solar standards.33
But other solar standards development organizations are not as effectively gaining consumer perspectives on important solar standards.34 According to Mr. Butt of the Solar Energy Industries Association, this is ". . because of the difficulty the consumers' representatives experience in being able to get to meetings. Often this is simply a financial difficulty." 35
The legitimacy of private consensus standards depends upon the full, fair and effective participation of all important constituencies in the development of a standard. This is particularly true when a standard will be used to allocate a public benefit. At a minimum, the SEREF mechanism should be extended to the other organizations which are developing solar standards.
The second concern is grounded on experiences with other standards. While the anti-trust laws require that "standards reflect existing technology and be kept current," 36 "[i]nsufficient updating of standards is a perenial problem." 31 To deal with this problem, appeal mechanisins for technologies which are excluded 'by a standard are a key element in the FTC's developing trade regulation rule..3 Government
3 Legality of a Proposed Standards Certification Program, 78 FTC 1628 (1971); Radiant Burners, Inc. v. Peoples Gas Light tf Coke Co., 364 U.S. 656 (1961) ; Silver v. New York Stock Exchange, 373 U.S. 341 (1963). a' David Hemenway, "Remarks", The Solar Market; Federal Trade Comission, June 1078, p. ee also lemenway. D. Industrywide Voluntary Product Standards (1975). "S Standards and Certification, Bureau of Consumer Protection, Federal Trade Commissin, September 1978. Vol. II.
.Actire Solar Hearings, supra note 1. Tr. at 3.
Staff interview with Mr. Jean Zerlett, American Society for Testing and Materials, November 14, 1978.
SActire olar Hearings, supra note 1, Tr. at 181.
35 Id., Tr. at 181.
See, Legality of a Proposed Standard Certification Program, 78 FTC 1628 (1971).
7 d.
1Proposed Trade Regulation Rule, FTC, 16 CFR 457.

21

must insist that appellate inechanisnis employed by developers of solar' standards will be both fair and rapid to avoid freezing out technical innovation.
The Energy Tax Act requires the Secretary of the Treasury to establish a procedure by which a manufacturer may request the Seeretary to certify an item as eligible for the tax credlit.39 If private standards organizations are operating effectively, this mechanism will only 'be required in rare instances. But in all cases, judgments should be made rapidly. Because of the commercial importance of credits, delays in certification could mean the end of the firn making the appeal. If such assessments cannot 'be made relatively quickly, consideration should be given to interim certification of an item. D. Rating and labeling stalard8
Serious reservations have been expressed about establishing miinimum levels of performance for certain product attribute.40 If minimum levels of thermal performance and durability are required, consumers may be inhibited in making choices on the basis of system cost versus system output.
The range of choices open to the active solar consumer could be very broad. Simple "breadbox" systems 41 can pre-heat the feed water for a traditional hot water heater. Costing little, these systems capture enough solar energy to make them very good 'buys for many consumers. Alternatively, more sophisticated, more expensive systems can pro-vide the average family with more than half of its hot water requirements.
Existing HUD standards require that hot water systems produce enough 120'-140' F. water to meet about half the annual needs of the average family of four. This eliminates many inexpensive but highly cost effective systems.
It may be better to develop standards that prescribe a performance rating system without any minimum or maximum so that different technologies, designs, and manufacturing processes may compete freely. But such a full disclosure approach must be embraced with some sensitivity. Some product attributes such as safety cannot be appropriately regulated through disclosure.2 For those attributes for which performance rating is appropriate, it is essential that consumers be made aware of the quality and utility of the information being disclosed.
Two problems identified during the course of the Subcommittee's hearing on active systems suggest the kinds of problems or limitations which should be disclosed to consumers. Both examples relate to informnation on the thermal performance of flat place collectors developed pursuant to ASHRAE 93-77.
The first is the problem of testing and rating only a part of a solar system. As Dr. Yarosh explained, rating only the collector is:

30P.L. 95-618, 101, This section creates a new section 44C in the Internal Revenue Code of 1954. See 44C. (c) 6(A) (ii).
40 Active Solar Hearing8, supra note 1, Tr. at 69.
41 Breadbox systems generally involve one or more small tanks oriented to the sun. As water moves from tank to tank it gets warmer. Often the pressure to move this water is provided by the city water system itself. From the last tank in the series, water is piped to an ordinary hot water heater. By increasing feedwater temperature, significantly less fossil energy is required to heat a given quantity of water.
42 Id., Tr. at 186.

22
* * akin to obtaining a mileage rating on an engine and trying to project the results to the operation of an automobile. Obviously, mileage will differ with the size and weight of the vehicle and the driving habits of the owner. The same principal applies to a solar system. No matter how efficient the collector, actual system output depends on a variety of factors including system design and sizing of components, and the operation and efficiency of each component.'
The second problem is variation in the results of tests of the uaine collector with the same equipment. Lumsdaine found that he could not eliminate certain sources of significant test error such as wind velocity and spectral distribution of radiation.44 He found that these problems could result in performance tests which varied substantially.45
It would be best to eliminate these kinds of data problems through system tests and better tests. But to the extent such problems cannot be immediately eliminated, they must be fully disclosed.

II. CODES AND CERTIFICATION
A. Overview
Standard writing bodies are rarely regulatory entities. The power of a standard to determine behavior depends upon the mechanism by which it is enforced. In many cases, standards are incorporated into the building codes of states and localities. In other cases, compliance with a standard may be a condition to continued enjoyment of a license to practice a trade.
Each of these mechanisms has special problems. Incorporation of a standard into a building code is meaningless unless building code inspections are adequate. Trade licensing laws may or may not guarantee that an installation meets industry or government standards.
But a threslihold problem confronts consumers and the solar industry with respect to solar codes. Their coercive power may be used for good or ill. As a consequence, this Part begins with a discussion of the codes which are or may soon be applicable to solar. B. Potential problems vith codes
The existing national plumbing and electrical codes cover many of the materials and standard components of solar systems. However. many solar systems have unique characteristics that are not properly addressed by existing codes. According to Sheldon Butt,46 plumbing codes are written to cover the flow of plain water at relatively high pressure, while, the heat transfer process in many Solar systems involves water, antifreeze, or other liquids at relatively low pressure. In terms of pressuie, the existing code may be too restrictive, but nevertheless may be too lenient as regards the special precautions needed to handle nionaqueos heat transfer fluids. Some building codes require that all walls of a structure be insulated to a certain level. Th is precludes many passive solar systems.47 The International Association of Plumbing and Mechanical Officials issued in September 1976 a model solar code that contains special provisions for solar installa4 1d., Tr. at 14 R149.
1 Id., Tr. at pp. 137-146.
Id., Prepared Staitenent of Sheldon Butt,
Pa cc ire olei Mfirinl/., supra note 3, Tr. at 45.

tions. The County of Los Angeles, California, has a similar codle. According to Mr. Butt, however, "both have serious deficiencies."1 4
These experiences indicate that solar can be injured if codes are improperly or insensitively drawn. The danger is clear, but the Subcommittee believes that those dangers can be -avoided. The DOE has initiated the development of a national model solar code, which is being drawn up by the Council of American Building Officials, a representative group of industry and standards development bodies. Coinsumer participation has also been provided for. Work formally began in September with a six month target (late for the initial draft. While no assessment of the national model code can now be made, the code at it minimum will provide badly needed uniformity and establish a body through which continued alterations and additions can he affected.
If codes which have anti-solar provisions are a danger, an even more disturbing problem is that many states have no building codes at all. Only 23 states including about half of the Nation's population have some type of statewide building code .49 Most of these codes are mnandatory, but in several states adoption by local jurisdictions is voluntary. Moreover, state code enforcement is usually delegated to local authorities. The result is that in practice there is considerable variation among localities in the interpretation and implementation of seemingly similar code requirements. Florida's Dade County, which includes the Citv of Miami, has a county ordinance requiring solar installers to be licensed and collectors certified. According to Walter Dartland, a county official, there is little enforcement of this rule because of a lack of staff expertise, and funds5 In a number of states and counties there are, no building inspectors at all. In effect these areas have no codes to protect consumers.
C. Local inmpectiaow
A building code, no matter how well drawn, is only as good as its local implementation. The primary -burden of enforcing codes is borne by local inspectors. The effectiveness of an inspection requirement has two aspects. First, the fact that an installation might be inspected has a certain deterrent effect in itself. The second, and most important aspect is the quality of the actual inspections.
To test the effectiveness of existing inspection standards, all respondents to the Subcommittee's questionnaire who reported that they lived in jurisdictions where inspections were required were identified. Of this group, all those whose solar system passed inspection on the first try were selected and a tabulation of their reported system problems compiled. While the 66 persons who fit this category had fewer or no problems in some categories than the average, the frequencies of problems were still high enough in many categories to suggest that existing inspection procedures are inadequate.
48 See note 46.
49 "A Preliminary Examination of Building Regulations Adopted by the States and Major Cities", NBSIR 77-1390, November 1977, National Bureau of Standards, Washin-ton. D.C.
50 Summary of Remarks at the Final Planning Session of the Solar Energy Consumer Protection Workshop, Atlanta, Ga., May 6, 1978, co-sponsored by DOE and PSEC.

PROBLEMS IN INSTALLATIONS WHERE INSPECTION WAS REQUIRED AND THE SYSTEM PASSED THE 1ST TIME (TOTAL= 66)

This suggests the strong need to upgrade the understanding of local inspectors of the problems common to solar systems. Federal support of the training of local inspectors should be expanded to meet this need.

D. Trade licensing
The present installer licensing system, where some type of licensing requirement exists at all, appears inadequate based on the Subcommnittee's survey. The following results were obtained:

WHICH OF THE FOLLOWING STATE OR LOCAL GOVERNMENT LICENSES DID YOUR SOLAR ENERGY SYSTEM'S INSTALLER POSSESS

Since 190 respondents indicated that they hired someone to install their solar systems, most installers had a general contractor's license and many appear to have possessed several licenses. Of particular interest is the high number of installers that were reported to possess somne type of special solar installation training or certification. This may reflect the large number of respondents from California.
Since do- it-yoursel fers reported fewer system operating problems than persons who hired contractors to install their solar systems, current trade. licensing requirements and practices may not be adequate to prepare c-ontractors to install solar devices. Rather, the "earn while you learn" principle seems to apply. Clearly, improved trade licensing pr~o-edures are, needled. Another pr-o1b1er is thiat even if licensing procodure-s are improved, current license hiolder-s wvill almost ceirtainly be ra(1d(fathieredl into thie solar- installation field. And as can be seen from he(. following examinple fromi Florida, licenses are not hard to obtain.

25

Although Florida law requires that anyone who desires to engage iii the construction industry on a, statewide basis must meet state certification requirements, and provides for 12 types of contractors, the law applies only to persons who desire to operate on a statewide basis. Other prospective contractors must only register with the Florida Construction Industry Licensing Board. No examination is returned and regulation is left entirely to the competency and resource -1 local governments.,51 The ineffectiveness of existing trade licensing laws and procedures has led some observers to conclude that such regulations result more in a false sense of security than in consumer protection.
Since trade licensing is traditionally a state or local responsibility, the most appropriate, immediate Federal role is the provision of training to prospective installers and technical assistance to states. In addition, consumers must be made aware of the need to caref ully oversee the work of their installer.
51 Handout on Trade Licensing Laws, Consumer Protection Workshop, Atlanta, Ga. May 3-6, 1978.

( i1xiiAPTE 13.-WXIRANTY A NI) ISCLOSU REd ISSUES

1. WV.XIRXNTY ISSUES

The Subcommittee has identified a number of problems associated with solar warranties. The most important. is that many solai- con~sumers (1o not receive any warranty at all. Paradoxically, anothe. problem is that some consumers receive multiple warranties. But when they turn to a particular warrantor for- service, they find that whatever their problem, it was another firm's fault.
Federal policies toward solar warranties must balance a number of potentially conflicting consumer interests. TI e Federal government could require that purveyors and installers of solar systems provide substantial warranties. On the surface, such a policy is extremely attractive. But such mandated warranties run the danger of -being so burdensome that they could force small competitors from the solar marketplace. An even greater danger is that consumers may be provided with warranties which offer only the illusion of protection.
The Subcommittee concludes that while indi vidual consumers should insist on a warranty from both their installers and suppliers, the Federal government should not immediately require long-term warranties. However, it can immediately begin to deal with the quality of solar warranties through supporting programs which will stand behind the warranties offered by solar sellers. B. Problems with solar warranties
The Subcommittee survey found that nearly one third of the respondents were not provided a written warranty. For those that receive warranties of any type and attempted to use them, all service requests were honored in almost 90 percent of the cases. There was no significant difference in warranty service provided by manufacturer, dealers, and installers.
Were writ ten warranties given?
Valid responses ----------------------------------------------------- 323
No (percent, 31.3)--------------------------------------------------- 101
Yes (percent, 61.3)-------------------------------------------------- 198
Don't knowv (percent, 7.4)--------------------------------------------- 24
Have you used your warranty?
Valid response ----------------------------------------------------- 183
Yes (percent, 37.7) ------------------------------------------------- 69
No (percent, 62.3)--------------------------------------------------- 114
What happened when you tried to use it?
All requests honored (percent, 88.4) ------------------------------------ 61
One honored, others not (percent, 7.2)----------------------------------- 5
Ma 'ny not honored (percent, 1.4)-------- ------------------------------- 1
No request honored (percent, 2.9) -------------------------------------- 2
(27)

36-734 0 79 3

28

The absence of written warranties in nearly one-third of the cases probably stems from the current configuration of the solar industry. Very small firms are predominant.52 Low entry barriers in conjunction with rising consumer demand engendered by solar tax credits are expected to bring more small companies into this industry.
Some firms design, construct and install their own systems either directly or through a franchise system. As a consequence, they can offer a warranty that covers all of the components of a system and its installation. Similar warranties are offered by system purveyors who sell and warrant a solar package which includes hardware and installation.
But in cases where a consumer gets separate warranties on the various components of a system and its installation, he can be caught in the middle. In the case of a system operation problem, it may be difficult for the consumer to identify who is at fault, and the manufacturer and installer may disagree. Improper installation can ruin or damage a well-designed and constructed collector, and shoddy equipment will not perform well no matter how carefully installed.
To avoid this problem, a consumer would be well advised to seek out a warranty on the installed system. Failing that, the consumer may require a "referee" mechanism by which the dilemma of who is at fault for a problem may be resolved. In California, an arbitration system for solar problems of this kind is administered through that state's Department of Consumer Affairs.53 It is reportedly quite effective and may offer an important model for an appropriate "referee" role for government.
Warranty coverage varies significantly in scope and duration. Most solar vendors provide a limited warranty, which may allow them to cover parts but not labor, to impose a repair charge on either parts or labor or, in the extreme, to require the consumer to pay the labor and shipping costs of returning a defective part to the manufacturer. The latter type of warranty is in effect no warranty at all in the case of a bulky, hard to install item such as a solar collector.
0. Problems with minimum warranties
HUD now requires certain minimum warranty coverage be provided by the manufacturers and installers that participate in the fourth cycle of HUD's solar water heating demonstration program. While appropriate for a limited government program (this HUD
demonstrationn is confined to 11 eastern states), mandating similar warranty requirements for all solar manufacturers and installers may not be wise. For example. HUD now requires a five-year warranty from the collector manufacturer against defects in material and workmanship. For manufacturers who have only been in business a few months or a few years, or who are producing a relatively new type of collector, the warranty provision will be extremely difficult to cost. If the added cost is too high, sales will be discouraged because frontend costs already make the economics of active solar systems precarious in many instances. If the cost is too low, the warrantor may not have

A 1976 survey of 70 solar companies in Florida found that about 70 percent had been In btiness less than two ears and that on the average they had 3.6 employees. See also Opening Statement of Dr. Yarosh. Active Solar Hearings. supra note 1. F- Subcommittee staff Interview with Commissioner Ronald Doctor, California Energy Comnnission. Seutebiher 9. 1978.

on
IOU

the resources to be able to cover the warranty and be forced out of business if problems occur. At present, a warranty is only as good as the company that issues it. A comprehensive warranty from an undercapitalized company may be worse than no warranty at all because the consumer believes that lie or she is getting protection where little or none exists. Comprehensive warranties may also be anticompetitive in that they favor larger companies over small businesses.
There appears to be a trade-off between warranty coverage, cost, and the ability of the warrantor to perform as promised. But the problems of prejudice to small or innovative firms and hollow warranties appear to become more acute as the term of any mandatory warranty is extended. Since the surveys discussed in Chapter I indicate that most problems arise relatively soon after installation, requirements for short-term warranties would seem both worthwhile and appropriate. Such a requirement should include the workmanship of installers, a principal source of the problems identified in Chapter 1.
According to Mr. Butt of the Solar Energy Industries Asssoc nation, the industry "would not object" to some minimum guarantees being made conditions for eligibility for Federal tax creditS.54 But the level of protection to be appropriately required as a condition to eligibility is unclear. According to Mr. Sherman of HUD, the matter requires
4 55
an awful lot more study. The, Subcommittee believes such studies must be expedited and decisions made with respect to the proper terms and conditions of mandated warranties. In the interim, a relatively short-term warranty of no more than one year's duration should be mandated.
D. Warranty assurance
An initiative which could help the consumer get his rights without injuring the infant solar industry is a warranty insurance program. Such a program could step in and provide redress in cases in which a manufacturer, distributorr. or installer has gone out of business or cannot otherwise carry out his warranty obligations.
The fund might be established by the solar industry, the federal or state governments, or it could be a joint effort, such as has been suggested in California.56 Parti citation could be mandatory or voluntary. Contributions could be collected in different ways. The California proposal, 'for example, calls for quarterly premiums from each member based on retail sales from the previous quarter. The assessment of charges would be much more difficult were members offered differing warranties. The monies would be held in an escrow account and assessments could be adjusted periodically o reflect expenditures by the fund. A reward and punishment provision could be included that would raise or lower the premium on individual members depending upon the number of problems they experienced. If the governing authority of the fund believes a member company may be in hazardous financial position, it has been suggested that the governing authority have the power to order an auditby a certified public accountant.. The fund must have the authority to suspend
54 Active Solar Hearin98, 8upra note 1, Tr. at 187. 55 Id., Tr. at 341.
56 See, California State Assembly Bill No. 2982, Assemblyman Bates, introduced in the 1977-78 Regular Session.

or terminate membership although in eases of unintentional finan~al difficulty or bad business practice, termination of membership would seem to defeat the purpose of the fund.
Federal or state government reinsurance of solar manufacturer, distributor, or installer warranties has also -been proposed as an alternative to terminating membership in the insurance fund under certain conditions or as a separate and distinct plan whereby the private warranty insurance of the individual companies would be backed up by the government. Such a pla 'n would have to be carefully drawn to avoid the obvious temptation of private insurance vendors to ensure any and all applicants secure in the knowledge that the government would make good on any failures.
An insurance fund could establish an inspection service that would be the basis fox' an informal dispute settlement mechanism. Even in the absence of a fund, a technically competent, neutral third party solar inspection service would be of enormous benefit to solar consumers. While HITD has the equivalent of a toll-free solar hotline in the National Solar Heating and Cooling Information Center, the type of advice and information that any federal government agency can properly dispense is limited 57and is not likely to include the kind of economic, technical, and legal guidance that the consumer really needs.
In addition to the inspection service, the insurance fund should have a mechanism for handling consumer inquiries and complaints. A general conciliation and arbitration procedure to cover disagreements, employing technical inspectors as needed, has been suggested. The fund would not, of course, limit any party's right to bring a court case except, perhaps, in instances of binding arbitration.
One existing model that includes a number of these features is the Homeowners Warranty Program (HOW) a voluntary program for builders established in late 1973 which is administered by a subsidiary of the National Association of Home Builders. HOW has an unsalaried Board of Directors, a broadly representative advisory board, full-time professional staff to coordinate the program at the national level and a series of local and State councils, which operate as whollyowned subsidiary corporations of their respective builders' associations. HOW provides the home buyer with a written warranty against major structural defects from the builder, who is backed up by a private insurance carrier for the first two years. For the next eight years, the home owner is directly insured by a national insurance plan. The local council provides a neiltral party .to investigate the priob~lem to attempt to resolve the dispute. If unsuccessful, the matter can be referred to the American Arbitration Association.

HI. ISCLOSURE ISSVE-1.1
A. Before the sale
Consumers may confront a number of problems in dealing with solar sales mnater-ial. This material appears to be the primary basis upon wNh icl osiier mit make their buying dlecisions. In responding to the Stibmii )Oitt ee' survN, respondents relied upon dealers in solar equip7A, ctit c solar IIctwittgx. Hxirti note 1, Tr. at 19 3.

31

ment most often (61.8 percent). A magazine or journal article was next (56.5 percent), followed by a solar fair or exhibition (37.6 percent), a friend or neighbor (26.1 percent), an advertisement other Hiall on radio or television (20.9 percent), and a home builder (19.9 percent). State agencies were next (17.8 percent), closely followed by other Government agencies (16.2 percent), which would include Federal. Previous owners, real estate salesmen, and radio and television advertisements were all cited in 5 percent of the cases or less.
In the key area of estimating the amount of utility costs that a solar system would save, respondents relied far more heavily on solar energy equipment salesmen (43.4 percent) than any other source of information. The next most frequently cited source for savings data was the respondents' own calculation (15.8 percent).
An example of the quality of the solar sales material which may be in store for some prospective solar consumers is the door-to-door sales campaign now being readied by the American Solar Power Products Corporation, headquartered in Kansas City, Missouri. According to a sales brochure dated October 15, 1978, the company plans to mass market a solar hot water, space heating and cooling system called Sun Star 92.-58Promising no down-payment, easy fi-nancing, and a product "dependable as the sunrise," which will reduce heating bills "up to 70 percent or more" each month, the company has designed a sales pitch heavily laced with patriotic appeals and dire warnings of an imminent energy shortage and skyrocketing fuel prices from senior Department of Energv officials. The brochure employs highly dubious economic assumpt ns, including a prediction attributed to the Department of Housing and Urban Development that fuel oil prices will increase 18 percent each year for the next three years, to illustrate how purchasing a solar system costing several thousand dollars will "save" the consumer between $20,000 and $30,000 in ten years.
While the Subcommittee hopes that this brochure is an extreme example, it is clear that some regulation of sales claims is necessary. The Subcommittee has been made to understand that computer simulations of system performance and economic payback are widely employed in the selling of systems. Two popular computer programs, Sol-Cost and F-Chart, can project economic performance only within fairly broad ranges.19 Consumers can be helped by these programs. But consumers must be made aware of the recognized limitations of these computer projections before they make a major investment on the basis of the estimates provided by them.
Increased consumer information prior to system purchase is the best remedy for such problems. While false and deceptive advertising and selling practices are generally prohibited under the FTC Act and its State equivalents, the task of establishing the fraudulent practice in each case is laborious and results only in a cease and desist order. The FTC should give serious consideration to promulgating a Trade Regulation Rule for solar sales, which would prescribe basic disclosure requirements, and provide for civil penalties or require violators to make restitution to injured customers. Disclosure requirements could include warranty coverage, operating and maintenance instructions.
58 A copy of the brochure is retained In the Subcommittee files. 30 Active Solar Hearings, supra note 1, Tr. at 147-148.

on
OR

explanation of thermal performance and other test results or ratings, representations as to eligibility for tax credits and clear and full ex. planations for any cost or energy savings claims. B. After the 8ale
The majority of solar consumers sampled by the Florida Solar Energy Cen fid not receive sufficient operating and maintenance instructions. The Subcommittee found in its survey that in over 47 percent of the cases consumers were not provided with operating and maintenance instructions. When provided, however, the instructions appeared useful. Over three quarters of those who received such instructions had attempted to use them. Over one-third found the instructions excellent and only 4 percent reported the guidelines were inadequate.
Failure to provide simple operating and maintenance instructions to consumers is inexcusable. Requirements with respect to the provision of such information should be made a condition to eligibility for the Federal solar tax credit. In all cases, individual consumers should demand this information from their suppliers.

4

CHAPTER4.-WHATAN ACTIVE SOLAR CONSUMER CAN Do Now
A. Overview
There are many steps a consumer can take to ensure that lie or she is making a wiE* solar investment. These include acquainting oneself with how solar systems work, making a simple economic analysis, and comparing the features, prices and warranties offered by different system suppliers or installers. By exercisinz care in the purchase of a solar system, consumers can ensure that wh'-at they buy will work and work economically.
The first step is to learn about solar energy. Consumers should familiarize themselves with the designs of the various systems available. This can be (lone by obtaining information from the National Solar Heating and Cooling Inform ation Center (800-523-2929 or in Pennsylvania, 800-462-4983), the. state energy office, the local or regional solar energy association, local community groups active in the solar field, or f rom local solar professionals.
A simple economic analysis should then be made to see if the solar system would be economical. One should compare the approximate cost of the system with the potential savings in monthly utility bills over the long-term. When making these simple calculations, consumers should consider potential tax credits, special low-interest loans and other subsidies which may be available from federal, state or local agencies. These subsidies can significantly reduce the initial capital costs of the system. Guidance in making these calculations can be provided by the local utility or various books on buying solar, some of which are listed at the end of this chapter.
In considering the purchase of a solar system, consumers should make sure that other more cost-effective energy investments have been made first. These include insulation, storm windows or doors, caulking or weatherstripping, a thermal blanket for the hot water heater, water heater timing devices, and automatic setback thermostats. Otherwisel the savings from a solar system can often be achieved at lower cost.
In choosing a supplier or installer, one should find out about the firms' track records, experience, training and local reputations in the solar field. This can be done by inquiring directly from the firms and f rom consumers who have previously purchased solar systems from them. The National Solar HeatinL and Cooling Information Center can provide to a consumer a listing of solar manufacturers, contractors and installers and of solar installations located in his or her state. While being listed does not represent an endorsement, these lists are a useful source of information.
Consumers should be sure to obtain a written cost estimate of a complete system with an itemized breakdown of all costs, including installation. The costs of any regular maintenance, required should also be ascertained. In some cases, a service contract may be offered by the
(33)

34

installer, in which case the precise terms of the contract and who will be making the repairs should be determined. It is strongly recommended that some part of the purchase price be withheld until the system has operated well for a week.
A written warranty is a must. When examining the warranty, the consumer should find out what the warranty covers and what it does not cover. A five-year warranty for the solar collector is reasonable. However, one should be somewhat wary of long-term warranties; they may be misleading. One should be sure that the company with which one is doing business can back up the warranty. A warranty is only as good as the company which offers it. It is very desirable to have a single warranty which covers both components and installation.
The system chosen should be designed for the particular needs of tho house while considering local climate and topography. It may be wise to consult an experienced solar professional in choosing the most al)l)ropriate design. Also, the consumer should make sure that the supplier agrees to ensure that the system conforms to local building and zoning regulations.
Once the system has been installed, it should be thoroughly tested by the installer and inspected by local building authorities. The system should include simple monitoring equipment so that proper operation can be monitored throughout the life of the system. The consumer should obtain an owner's manual which clearly explains the operation of the system.
By taking these steps consumers can be substantially assured that they are acquiring a system which can save hundreds, perhaps thousands, of dollars over time. For further assistance in buying solar systems, consumers may wish to review the more specific suggestions of the New England Electric System as well as consult the information sources listed at the end of this chapter. B. Consumer suggestions provided by the New England Electric
System)
I)uring the Subcommittee's hearing, Mr. Jack Meeker of New England Eletric made many valuable suggestions for consumers purchasing solar systems. The suggestions pertain specifically to water lieating and are summarized in a short New England Electric brochure. As a supplement to the Subcommittee's suggestions, the contents of the brochure follow:

35

WATER
CREATING ccwmm

IDE

W11, 7 1; 7T.

77

7J,
'N V, tF u 7 '7

36

EKMNG
A
WATER HEAMNG wiyapi

PURPOSE

Solar energy provides several major benefits:
(1) reduction of national dependence on imported
oil, which is subject to supply interruptions
and rapid price increases, (2) minimal
environmental damage, and (3) reduction of the
-drain on our limited oil and natural gas
supplies. The means of usinglsolar energy to supply heat and hot water are presently
available, but the rapid expansion of solar
technology has created a new industry whose members vary widely in technical
and business competence.

The following recommendations are given
by a task force concerned with improving solar hot water systems. They are based on a review of experience with installation and operation of
100 systems, sponsored by the New England
Electric System companies, and on the
members' knowledge of the solar industry.

Because no condensed statement can replace public education on solar energy's potential and problems, users are advised to consult the many
reference books available before buying,
particularly, "Buying Solar", (National Technical
Information Service PB-262 134); or call the
National Solar Heating and Cooling Information
Center's toll freehot line at 1-800-523-2929.

37

This booklet has been prepared in part with funding from the U.S. Department of Energy through the Solar Technology Transfer
Program at Brookhaven National Laboratory.
It may be reproduced without further
permission. Acknowledgment is made of the special contribution made by the New England Electric System companies in permitting a review by Robert 0. Smith, P.E., of the data obtained over many months of experience
with systems from a number of solar
manufacturers and contractors. Other
contributors include: the
Massachusetts Solar Action Office, the
Solar Energy Industries Association, Oak Ridge
National Laboratory, the Franklin Institute,
and the U.S. Department of Energy. Individuals
working on the consumer committee were Messrs. Ryc Loope of Sun works Inc., Jack Meeker of New England Electric System
companies, William Osborn of the Massachusetts Solar Action Office, Gordon Preiss a consultant
to Brookhaven National Laboratory, Burt
Swerdling of Grumman Suns tream Division,
Ms. Roberta Walsh, Chairperson of the
U.S. Department of Energy.

The material herein presented does not represent a consensus of the disparate
viewpoints of the contributors, but summarizes useful suggestions from each. Suggestions for its improvement are solicited.

Estimate the total installed cost
including materials, labor, permits
and fees, and service contract charges based on the contractor's written commitment.

2 Obtain in writing an estimate of the
system's performance, giving the total
solar energy supplied for the year. Two widely used methods of calculating this. yield are "The F-chart Computer Program" of the University of Wisconsin and "Solcost" of the U.S. Department of Energy. This figure should be considered with the price quoted by the contractor in selecting a system. Family and house size should be factored into the decision. The system's performance should be calculated and preferably tested by an independent, recognized laboratory in accordance with HUD minimum property standards. The calculations should allow for your location and family size.

3 Be sure the collectors face as near true
south as possible and are unshaded from 9:00 a.m. to 3 -00 p.m.

Select a system with well-insulated
VIVU0 (R-4 or better) and tanks (R-1 1 or better).

39

5 Select a system with adequate
protection against freezing. If antifreeze is used, note that toxic materials must be separated from the domestic hot water by a double wall design. If freeze protection depends on the electric operation of a valve, require firm assurance of the reliability and service life of the valve. If the system drains to avoid freezing, check the pitch of all piping exposed to low temperatures to avoid low pockets of water which may freeze and burst.
I

6 Select a system whose proper operation
can be monitored. An elapsed time
meter on the pump and thermometers in the storage tank and in the pipes to and from the collector are desirable. The meter should read under 80 hours per week. The thermometers should show a sizeable temperature increase while the pump is running. On a bright, sunny day, an increase of 15" to 25" is normal.

Require the contractor to pressure-test 7the system for leaks. Very little loss of pressure should be observed in tests of one hour at 125 psig, or of 24 hours at 25 psig.

Specify in the contract that final
payment is to be made after the system has operated satisfactorily for seven days and has then been inspected by the contractor.

IConsult several solar contractors
before making a selection. While timeconsuming, it is essential in obtaining quality work at a fair price.

2 Obtain a written quote on the complete
job. Consider the cost along with the other factors given below.

3 Consider the contractor's location. A
Local office is important in providing a
prompt response to service calls and also will be interested in protecting its local reputation.

4Determine the contractor's qualifica4tions. Experience in installing solar hot water systems as well as in such closely related fields as plumbing and heating is desirable. His support from the manufacturer of the solar equipment is also important and shou ld be verif ied by a certif icate of train ing or by supervision or inspection of the job by a representative of~the manufacturer.

5Establish the contractor's local
reputation. Request references and
check them regarding satisfaction with the installation, the amount of service that has been required, and the promptness of response to requests for service. Inspect some installations if possible.

41

SRequire a written warranty. Read
carefully and consider the provisions of the warranty. Disregard unwritten assurances. Prefer a full to a limited warranty; on a limited warranty f ind out exactly what is covered (federal law requires that all conditions be stated clearly). Require a warranty on parts and labor of at least one year. Try to obtain a warranty on the collectors, heat exchanger (if any) and tank of five years. Determine the obligations of the manufacturer and contractor. Seek a warranty that is transferable to a new owner of the property. Obtain a commitment for a response to warranty calls within 15 days.

7 Consider the availability, terms and
cost of a full system service contract.

8Require an Owner's Manual. The
manufacturer should provide a clear and complete manual which the contractor should review with the homeowner.

9 Obtai n written ag reement that f inal
payment will riot be made until after the system has operated normally for seven days and then been inspected by the contractor.

A. Overview
The f undamental problem confronting most potential. Consumers of passive solar is that, they are denied effective access to tlie technology. O~esign andl performance information is still largely conifinied to g:overlmnt aboatories. Even if a consttmer finds one of the few- desi,( i rs or builders who can design or build an effective passive sstem, the consumer wNNill probably be discriminated against in seeking Federal solar tax credits. 61
What the ready availability of this technology could mean to an individual consumer is suggested by the home of Dr. Douglas Balcomb in Santa Fe, New Mexico. Electric baseboard heaters supplement his passive system and assure that inside temperatures do not dip below 65 degrees. Notwithstanding below freezing outside temperatures, Dr. Balcomb's electric bill for auxiliary heat last winter, for the whole winter, was $38. In addition, he burned half a cord of firewood.62 Dr. Balcomb reports that his home provides "a very comfortable
environment." 63
For a Nation of consumers, passive solar could displace the equivalent of one half million barrels of oil per day by the year 2000. If appropriate actions are taken now, the Nation could reasonably expect to incorporate passive solar into 10 million of the projected 40 million new buildings which will be constructed through 2000. In addition, it also appears feasible to passively retrofit 10 million of the present stock of 70 million buildings.4
But neither individual consumers nor the Nation will enjoy the benefits of this technology unless actions are taken now to deal with the problems of information and Federal financial incentives. Information to be useful must be targeted on small contractors as well as consumers and local governments. Since the technology is somewhat difficult to precisely define, the targeting of financial incentives is more difficult but no less necessary than in the case of active solar.
Because of the importance of a knowledge of the technology to an understanding of these policy problems, this chapter begins with a review of the passive solar technologies that appear ready for widespread use. Only after a review of the technology and its costs does this chapter consider the specific problems confronting the potential passive solar consumer.
61 Passive Solar Hearings, supra note 3, Tr. at 29-30. 12 Wade Greene, "Solar Refractions", New Times, May 29. 1978, p. 5. "m Passive Solar Hearings, supra note 3, Tr. at 25. 04 id., Tr. at 29.
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36-734 0 79 4

44

B. The technology 65
A passive system is "one in which the thermal flow is by natural means, that is by radiation, by conduction or by natural convection.6" According to Donald Watson, architect and solar author: "A passive system has only one moving part, the earth moving around the sun." 67
But this movement provides significant opportunities to solar designers. As suggested by Dr. Balcomb, "the sun angles work in our favor." 68 The sun is higher in the sky during the summer than in the winter. The sun also traverses the sky to the north of true east-west during the summer and well to the south during the winter.69
This solar geometry means that a simple overhang can allow warming solar energy to be admitted through a window during the winter but keepl) it shaded during the summer. Putting windows on the south side will provide warmth in winter without necessarily increasing indoor temperatures in the summer. In fact, proper orientation alone can make a building 10 degrees warmer in the winter and 10 degrees cooler in the summiner.70
There are currently five generic types of passive solar systems which appear to be ready for widespread use. The first is a direct gain system. At its simplest this system involves locating windows on the south side of a building. The sun shining through the windows heats the interior during the day much as the interior of an automobile is heated on a sliunny. winter parking lot. Excess energy can be stored through heating floors or walls within the structure for nighttime use."
The concept is simple but effective. An example of its use is provided by a house in Hinesburg, Vermont.72
It has double glazing to minimize heat loss through the windows and a massive central fireplace wall to store solar heat for use during the evening hours. This system offsets all of the daytime heating loads while providing some heat at night.
A New Hampshire warehouse suggests a cost effective commercial application of this approach.4
I)ouble glazed acrylic material allows the sun in. The sun's heat energy is stored in the materials which are located within the
Walehouse.'75
The second type of system is a mass storage wall. This is sometimes referred to as a Tromlxt wall after the French designer, Felix Trombe, who )popularized the concept.7'
This section is largely based upon the testimony and slides presented to the Subc('ommit tole by I)r. Douglas Balconmb, Los Alamos Scientific Laboratory. For further elaboration on tihe technology, the reader should consult the Passive Solar Hearing at pp. 2-29 or th article written by IDr. Bal omb entitled "State of the Art in Passive Solar HIeating and ('Cooling". Los Alamos Scientifice Laboratory, Los Alamos, N.M. (87545), N pp. Id., Tr. at :8.
As quoted in an article by Wade Greene entitled "Solar Refractions". New Times, May 29. 1975. p. 4.
P 'ssire ohlar lctrin/gs, suprn note 3:. Tr. at 2. 'O S(-e note 67.
-.P(s ire Nolar Htearings, supra note 3, Tr. at 2.
Sd., Tr. at 3.
Sid.
IfPassire Holar Hearings, supra note 3. Tr. at 3-4.
Id., Tr. at 7 .
Id., Tr. at 7.
Id., Tr. at 9 1.

An example of this system is provided by a home in Princeton, New Jersey: 77

MN 7

This house is of well insulated frame construction except for a 15inch thick Trombe wall covered with double glazing on the south side. Six windows penetrate the wall to provide interior light for this side of the building. This system provides 80 percent of the heat required by this homV.
The therm'"al mass of the wall need not be concrete. 'Water containers lave been successfully employed by a company located in Star Tainnery, Virginia .78 The south-facing brick walls of old factories have been turned into effective Tromnbe walls through the addition of double glazing. The flow of heat during the day is controlled by opening andl closing the original wind ows.79
The third design is the enclosed sun space, or greenhouses.',
With the living area separated from the sunspace, heat diffuses through the wall mass much as it does with a, Trombe wall. This system can be simply "bolted on" to existing structures. As a consequence, it has been characterized as a "tremendously viable and effective concept for retrofitting or upgrading an existing building." "i
An example of a retrofit greenhouse is provided by this wood and fiberglass greenhouse in Denver, Colorado: 82
77 Id., Tr. at 13.
78 Id.
79 Scott F. Keller, "Retrofitting Warehouses", Solar Age, September 1978. pp. 28-30.
w4 Pa~,sii'e Solar IHe(riflg8, s3upra note, Tr. at 15.
81 Id.
82 Id., Tr. at 17-18.

By reversing the times the insulating panels are open, this system can be used for cooling in climates where dehumidification is not required. Opened to the evening chill, the mass is itself cooled. If the insulation is closed during the day, the stored coolness will help cool the home.
This concept has been popularized by this home in California. 5
While it does require movable insulation, the system is reportedly quite effective.86
The final type of system is the convective loop or indirect thermosyphon.87
w, Id.
MId.
s Id., Tr. at 21.

60

Thle collections aiea is placed below the storag-e mass so beat can be t rans-fe ired without~ thle n1ed or ie ana assistance.
Anl eXainj)Ie of this approach is providedI by this home in Albuquerqjue, New Mlexico.88l

-Id., 'r. at 21-22.

Rock bed storage is~ pro)vided tinder the 1)orelh behind and above the collectors.
(C. The costs of passive 80/U i'
According to a study prepared by the Office of Technology Assessment (OTA) for the Subcomititee:8 the cost of heat from commercially installed passive solar heating systems ranges from $6.50-$16.50 per million Btu and is as low as $2.00 per million Btu if based only on the cost of new materials for owner-installed systems. This compares with present costs of $4.80-$16.00 per million Btu for typical furnaces, baseboard heaters, or heat pumps using gas, oil, or electricity. It thus appears that passive solar heating can be competitive with conventional home heating today.
Expressed in terms of the additional cost to the consumer for a, passive system over the cost of normal wall per square, foot of solar collection area, the systems dliscussed in the previous section break down as follows: 90
Direct gain, $2 to $13;
Mass storage wall (Trombe Wall) ,$8 to $18;
Attached sun space, $5 to $15;
Thermal storage roof, $10 to.$2.5: and
Convective loop, $5 to $8.
Recognizing that a number of engineering judgments are required, the Subcommrittee asked OTA to provide estimates of the costs of various specific passive solar installations to assess the actual costs of this technology. These estimates are pr'ov'ided in Table 1.
89 Id., Tr. at 32.
9Id., Tr. at 49.

Passive solar is very competitive with electric resistance heat. Passive solar is marginally competitive with regulated gas. And it is the clearly superior choice if the comparison is with synthetic gas or other "new" sources of energy supply. D. The information gap
An important threshold problem for most consumers is a lack of information about passive solar technology. Few consumers are generally aware of the technology and its potential. For those few who seek out passive solar systems, only a small number of suppliers, builders or architects are available who have the expertise to meet their needs.
In large part, this problem will be solved only if the Federal government assumes a different posture toward commercialization of this technology. As suggested by Dr. Hirshberg of Booz, Allen, & Hamilton: 91
[T]hie Federal Government has traditionally focused only on research and development and not particularly on commercialization. The notion I think had been that once you developed a better mouse trap, the world would beat a path to your doorstep. I think there are a number of specific instances where that has proved to be false, and these small but very useful technologies, such as solar passive and active water heating and inexpensive active space heating, are good examples of that.
Since passive solar is principally a way of designing buildings, a program which effectively gets this technology out to consumers must deal with "the wide variety of players in the building industry process." 92 Three such "players" are particularly significant: the small contractor, local governments and the consumer himself.
Small contractors construct 70 to 90 percent of the homes and structures which are most suited for passive solar.93 Typically, these builders do not use Mrchitects to design their products, even if they are large tracts. Plan books povide basic designs which are varied to meet local needs. Unless a structure is being custom built for a particular buyer, financial pressures force the small builder to sell his product as quickly as possible. In the words of Dr. Hirshberg: "Once his project starts, the meter is ticking, he doesn't. want to fool around with anything new, anything different." 94
These realities suggest the elements of a passive solar commercialization program directed at small builders. First, passive solar plans analogous to those in plan books should be made available to the sniall builder. Validated, simple design tools or rules-of-thumb would also b, useful. Second, the builder must be substantially assured that a structure containing passive elements can be sold. Consumer information programs and commercial demonstations of the technology can address this problem.
Federal prograiis appear to be moving in these directions."5 An initiative which speaks to both of these problems is a design competit ion f. pIassive solar st pictures. HUID's j)assive solar design competi[, ld.. Tr. at 76.
i, t I ., rr. at 77.
T., Tr. at 77.
Prl:edirick 11. Morse and NIichael MaybNum. "Commercialization Strategy Report for P'a ssive Solar U.eg,' I S. I)epart meant of Energy.

tion makes dollar awardIs for designs with the amount increasing if the design is actually built.96 This mechanism wvill generate bothi designs and demonstrations. A reasonable next step would be to target such competitions on particular parts of the country and types of structures. Tract housing, the houses most of us buy, is a particularly appropriate focus for these programs.
A special competition or other incentive for the development~ of easily applicable retrofit systems could provide significant benefits. According to Dr. Hirshberg: "there needs to be more research andl development in terms of justifying those kinds of [retrofit] designs from a technical point of view and then looking at the chain in which those designs might get out there in the market place and utilized." 97
Demonstrations of the technology to the glass and masonry industries would also be extremely useful. These industries have generally been considered losers in the search for energy efficient building materials and designs. In fact, these materials coupled with appropriate passive designs can make them substantial winners.98
Local government is a traditional and most important "player" in the building industry. For passive solar consumers increased local government expertise would pay large dividends. Proper orientation with its attendant savings in energy could be mandated at the local level. Local building authorities can also act to provide "solar easeinents" which would guarantee that a solar system is not blocked from the sun through the construction of a high building or the planting of a tree. To deal with these problems, the Federal government can appropriately provide information and technical expertise to states and local governments.
Finally, the importance of informing the consumer about passive solar cannot be understated. Professor B alcomb estimates that nearly 10 percent of all the solar homes in the U.S. are~ in N ew Mexico, a state where the potential of solar energy has been relatively wellknown for some. time and where a tax credit has been in place for nearly three years. In Taos, a community of about 30,000 people, P-rofessor Balcomb reports that about a quarter of all new homes built since 1975 are solar. 99
A problem which confronts those trying to design an effective Federal passive solar program is the inability to seek important information on the needs and interests of those involved in the solar market. Dr. Hirshberg argued stronglN, that we need a "federal intelligence gathering mechanism in place, so that we can on an ongoing way understand what is actually happening in the marketplace [in order to] continually improve and upgrade federal proposals to take into account what is happening out there." 100 The Office of Management and Budget (0MB) places significant limitations on acquiring this needed information.1ol At le ast with respect to noncompulsory questionnaires, the Subcommittee believes these OMB limitations should be substantially lifted.

E. The need for Federal incentives
The lack of replacement cost pricing for fossil fuels and electricity appears to be a significant limitation on solar development. The problem is that while passive solar is a very good buy for society when compared to the cost of many other "new"' energy sources, the replacement cost of energy, it is only marginally competitive against the prices most consumers actually pay. As a consequence, what appears to be the best mix of passive solar and fossil fuel expenditures from the perspective of an individual consumer, may not be a good buy for society.
This can be illustrated by reviewing the following tables which compare the economic performance of a Trombe wall against heat prov-ided by natural gas, home heating oil, and electricity. These tables were provided the Subcommittee by Professor Noll during his testimony and are based on work done at, the University of New Mexico and thle Los Alamos Scientific Laboratory.02
Each table indicates that a consumer who wishes to minimize his expenditures for heat would use some passive solar. The optimum percentage (or solar fraction) which minimizes total heating costs rises as the price of alternative energy rises. Thus a consumer in Madison. 'Wisconsin, would have pasv solar supply 20 percent of his hieatinvr needs if his alternative is natural gas. But if the alternative is higher priced fuel oil or electric resistance heat, the optimum solar f raction would be 45 percen~t.
Id 1., Prepared StatemenIIt of Professor 'Noll at 4T-54.

59

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According to Professor Noll, the heating oil alternative most accurately reflects the trade-offs which would exist if fossil fuels were priced at replacement levels. So that if energy were priced to reflect what it costs the American economy to acquire a, new increment of energy, a home in Los Angeles would be 60 percent passively heated; in Boston, 40 percent; and in Cleveland, 20 percent.
But consumers generally do not make trade-offs among energy sources on the basis of the replacement cost of energy. Domestic price controls coupled with the rolling-in of expensive new sources of fossil energy with old sources present consumers with prices which are below replacement levels. As a result, they buy more fossil energy and less solar than they should.
Two solutions are possible: increase alternative energy prices to replacement levels or decrease the price of solar systems through the provision of government financial incentives to passive solar consumers. The first alternative has been properly rejected by the Congress as unfair to consumers; the second has been pursued with active systems but not for passive solar.
The recently enacted Energy Tax Act of 1978, P.L. 95-618, provides a substantial tax credit for the purchase of "renewable energy source equipment." A credit of 30 percent is provided for the first $2,000 and 20 percent for the next $8,000 of qualifying expenditures, for a maximum credit of $2,200. This key credit is not extended to expenditures "which will serve a significant structural function in the (dwelling." 103 According to I)ir. Balcomb, taken literally this would largely exclude passive systems except for a few designs."'104
In the Subcommittee's judgment, this limitation substantially and inappropriately discriminates against passive systems. Passive systems are generally more cost effective for space heating purposes.05 To the extent consumers are influenced by credits they may be directed toward less cost effective technologies. As suggested by Congressman Gore: 106
It appears in summary that we give tax incentives to the least cost effective forms of solar energy (for heating and cooling) and we deny tax incentives to the most cost effective form of solar energy.
The Subcommittee bl.ieves this discrimination should be eliminated.
A problem which faces the provision of a credit is properly defining what is eligible for the credit. Such a definition must be as inclusive as possible without opening up the Federal treasury for any and all home improvements. This is a difficult problem. But both California and New Mexico have been able to meet this challenge in the provision of state credits. In California, the eligibility criteria for passive sohir pr-ovides af highly detailed guide to the technology itself. In N ew Mexico, individual plans are reviewed for their adequacy so the stated criteria are somewhat simpler than those used by California. Whateveri the approach, this problem cani and must be dealt with.
TFax c.ro(lits miay not, be the only effective way to provide proper eConomi11c signals to consumers. Because a passive solar system is an

integral part of a building, provision of passive, solar incentives through new mortgage instruments may be, even more, effective than tax credits. According to Professor Noll, tax credits and low interest loans could be "in terms of the economics . identical" but the psychology may be "different for the two programs." 101
Providing a solar subsidy through a low interest loan could be potentially more effective than a tax credit. When making a judgment on whether to buy a home., consumers generally give great weight to the cost of mortgage money. If that cost is decreased if a passive system is installed, consumers may respond faster to such an incentive than a tax credit. In any case, an individual consumer should not be given both an interest subsidy and a tax credit.
A graduated mortgage payment system by which interest payments are low at the beginning and rise over time, could also offer substantial benefits. A passive system could be installed on a new home and the cost of the system borne over time. As indicated by Congressman Gore "the long-term savings of utility costs would enable homeowners to keep up with the accelerated principal payments." 108 This matching of the timing of the occurrence of benefits and costs is very attractive. The Subcommittee believes that special consideration should be given to such innovative mortgage instruments in the development of appropriate financial ince-nd'v'es for passive solar.
107 Passive Solar Hearings, 8upra note 3, Tr. at 73. 108 Id., Tr. at 73-74.

CHArEr 6.-THE FEDERAL GOVERNMENT AND THE SOLAR CONSUME,1R
A. Overview
This report has identified a number of specific problems confronting the potential solar consumer. Consumer protections mechanisms need to be- substantially strengthened to protect the active solar consumer. Steps must be taken to give consumers effective access to simple passive solar technology.
The Subcommittee'would like to be able to conclude that the Federal government is rapidly moving ahead with policies and programs to address these matters. To some degree, Federal agencies are coming to grips with these issues. But emerging overall Federal policy appears to be uncertain with respect to these problems. Equally disturbing are the organizational problems which will stymie the implementation of any solar policy.
B. Policy dire ction
Federal solar policy is in transition. After years of neglect, solar energy is the recipient of a large and growing amount of Federal largesse. According to Busines8 Week, Secretary of Energy Schlesinger will ask for nearly a billion dollars for solar research and development in Fiscal Year 1980.109
At stake in the use of these funds and the Federal dollars which will doubtlessly follow is the magnitude of the contribution solar can make to U.S. energy supply. The range of possibility is wide. The Council on Environmental Quality concluded in April 1978 tha.t with serious energy conservation and acceleration of solar development, a quarter of the Nation's energy needs, or between 20 and 30 quads (quadrillion Btu's) could be provided by solar in the year 2000.110 Estimates prepared for the President's Domestic Policy Review of solar range from a low a 9.4 quads to 28.1 quads by the year 2000.111 Lieading solar author Dennis Hayes estimates that 25 quads is an achievable goal." These studies acknowledge that even very modest solar contributions to U.S. energy supply can be achieved only if sufficient attention is given the practical questions of how to establish the needed design, fabrication, installation and financial infrastructure of the solar industry.
How this Nation will deal with these practical issues is expected to be substantially determined by the Domestic Policy Review announced by President Carter on Sun Day. May 3, 1978. Premised upon the expressed interest of the President in making maximum economic use of solar energy, the list of recommendations contained in the Domestic Policy Review (DPR) are expected to set the Nation's solar agenda.
109 "The Coming Boom In Solar Energy". Busine88 Week, October 9, 1978.
110 "Solar Energy. Progress and Promise," Council on Environmental Quality, washington. D.C., April 1978.
"'~National Journal. September 23, 1978, p. 154.
11As quoted in the National Journal, Sept. 23, 1978, P. 154.
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While as yet only available to the public in the form of a not yet final "Public Review Copy", the document has already become a cause celebre. Amory Lovins, a leading "soft" technology theorist, concluded that it was "a largely vacuous and uncreative exercise in ducking the big issues".113 While Mr. Lovins' comment may be considered somewhat uncharitable, the DPR does show considerable adroitness in avoiding specific policy recommendations.
With respect to consumer protection, the DPR opines that "widespread public confidence is a critical factor for increasing solar energy use." 114 Indeed true, but the DPR goes little further than this in its review of consumer protection mechanisms. In the key area of solar warranties, the DPR merely notes that "An important issue is whether the benefits of warranties to consumers outweigh the possible benefits they (sic) place on the industry." 15
This treatment of consumer protection issues is clearly inadequate. The Federal government is pouring money into tax credits and grants to induce consumers to buy solar systems. Such actions impose upon the Federal government a responsibility to help assure that an individual consumer gets a system which is safe, reliable and worth the money. If such assurance is not provided, we run the risk that solar will be discredited and abandoned as a serious energy option by consumers much as heat pumps were abandoned in the 1950's.
With respect to actions on behalf of simple, relatively low cost technologies like passive solar, the Report notes that in the expenditure of $160 million for solar demonstrations "key program issues are the balance between systems development and systems demonstrations, particularly of current, relatively high-cost systems." 11 Neither the issues nor the facts behind the statement are discussed. But apparently the issue which the DPR is seeking to avoid is that Federal research development and demonstration subsidies have tended to go to more complex and less economically feasible solar systems. This is a central problem with the current Federal program and was much discussed by citizens and organizations providing input to the DPR.1"7 A recent study funded by the Department of Energy itself found that U.S. solar research and development programs underemphasize technologies like passive solar." Against this background, it is disquieting to see an important question essentially avoided.
The DPR is not yet final. It is the hope of the Subcommittee that the final version sent to the President will squarely address the problems of consumer protection and the need to have Federal programs meet the needs of the potential passive solar consumer. If it does not, the public muay agree with Amory Lovins that the drafters should "start over"."9
"" A copy of Lovins' analysis is available in Subcommittee files. For a summary, aec ELIergy Daily, Sept. 21, 1978.
114 "Status Report on Solar Energy", Domestic Policy Review, Public Review Copy. Aug. 25, 197S, IV-19.
11. 1d.
"011d. at IV3.
117 fe-, for example, remarks of Janies W. Benson of the Council of Economic Priorities of New York and Jerry Plunkett of the Montana Energy Research and Development Institute, at the Jul' 13, 1(97.. DPR meeting in Washington, D.C. summarized in Consumer Brlflnug Summary No. 7. prepared by the ()tlice of Public Affairs, Department of Energy. 114 "A Comparative .valuation of Solar Alternatives: Implications for Federal RD & D," SiI International, January 1978. See also Douglas Bal-omb, "The DOE Solar Program: A QuestIon of fil lance, "olar Age, May 1978.
'I .upra Ilot v 111.

67

C. The need for coordination
The task of organizing the Federal solar bureaucracy and (stablishing meaningful coordination with regional, state and local agencies has hardly begun. This would be a major challenge under any circumstances but the current structure of the Federal solar prograni imposes added burdens.
The National Solar Energy Research Institute, which has been designated as DOE's lead institution with respect to solar research, is managed by the Assistant Secretary for Energy Technology, while the four regional solar centers, which have the primary mission of comnliercialization and integral conservation activities, and work with states and local governments, come under the Assistant Secretary for Conservation and Solar Applications. Coordination between DOE Washington and the states generally is handled by the Assistant Secretary for Institutional and Intergovernmental Affairs. Consumer protection generally is handled by the Office, of Consumer Affairs and specific solar consumer protection is spread throughout Solar .Applications. The Deputy Under Secretary for Commercialization is also involved in several solar commercialization efforts.
Actual management of the large majority of existing demonstration programs is handled for DOE by HUD. Other federal bodies engaged in solar research and development include the Departments of Agriculture and Interior, the Environmental Protection Agency, and the Tennessee Valley Authority. The Department of Defense is included in solar demonstration programs. Financial and loan programs that relate directly or potentially to solar are administered by HUD, the Departments of Commerce and Agriculture, the Small Business Administration, the Community Services Administration, the Veterans Administration, the Government National Mortgage Association, the National Mortgage Association, and the Federal Home Loan Mortgage Corporation. Looking ahead, the National Energy Act contains several additional solar tax, loan, grant, and conservation programs that will need to be integrated with existing programs. At some point, so will the energy extension service.
Finally, the Treasury Department through the Internal Revenue Service will administer the tax incentive programs. The relationship of IRS to DOE and HUI) in carrying out these critical programs is still emerging.
The feeling of frustration and confusion as to who is doing what was aptly summarized at the Washington DPR meeting by David Morris of the Institute for Local Self-Reliance: 120
In doing the investigation for this presentation, I was struck by the number of people in local government, state government, and in the Department of Energy who told me that -they long since have thrown up their hands at trying to figure out who had responsibility for what within the solar bureaucracy.
Such a situation does not bode well for solar. Federal managers must take steps to clarify and rationalize solar program structures. In the near term, a hotline or other single source of information would be useful to guide consumers, local and state representatives, and industry through the current maze of solar programs.
1-20 Department of Energy, Office of Public Affairs, Consumer Briefing Summary No. 7.

SUBJECT: Summary of New England Electric Solar Water
Heating Experiment

Introduction

The New England Electric System began a solar water
heating experiment in September 1975 to test the performance of commercially available solar water heaters. The utility wanted to see if solar hot water heating could aid in leveling peak electric power demand. By December 1976, nearly all of the 100 test units were installed in single family
homes in Massachusetts, Rhode Island, and New Hanpshire.

Results

According to an October 1977 study of the experiment
prepared by Robert 0. Smith and Associates, a professional engineering firm from Newton, Massachusetts, "results are
still undetermined about demand peak effects because so much difficulty was encountered in the mechanical functioning of
the solar water heaters."

Specifically, the 100 installations functioned as follows:

I. Successful systems

Functioned Well No Serious Breakdowns

15 23 (includes best 15)

71

II. Unsuccessful Systems

At Least One Major
Stoppage Requiring Severely Interrupted Ve ry L ow o r
Technicians to Repair and Unreliable Service No Savings

77 20 27
(included in the 77) (included in the 77)
Overall average energy savings were under 20 percent. The best 15 systems reduced water heating energy consumption by an average of 37 percent in a severe winter, and the worst 15 systems averaged less than five percent savings. The budget, originally set at $250,000, nearly doubled. However, some systems were made to work well after major modifications.

According to the consulting engineers:

"'Most of the troubles encountered in this
project are due mainly to flaws in installation, secondarily to flaws in the selection of component sizes and types, (and)
thirdly to lack of inspections and adjustments which are necessary after installation.
Some problems can be associated with generic
type of system..."

Conclusion

According to a report prepared for the New England Electric System by Arthur D. Little, Inc., the experiment suffered from
"unreasonably high expectations." The report went on to observe that:

"The issue of high expectations is particularly relevant because of the government
grant and incentive programs currentlybeing established. Consumer frustration could impede the development of the solar market unless particul-v efforts are made
to insure that systems nstalled with government or industry support address
many of the difficulties encountered in
this program. In addition, consumers must
be cautioned in advance about the operating problems associated with these early installations."

72

REPORT

SUMMARY OF PERFORMANCE PROBLEMS OF

100 RESIDENTIAL SOLAR WATER HEATERS

INSTALLED BY NEW ENGLAND ELECTRIC COMPANY

SUBSIDIARIES IN 1976 AND 1977

PREPARED BY

ROBERT 0. SMITH AND ASSOCIATES

PROFESSIONAL ENGINEERS

55 CHESTER ST

NEWTON HIGHLANDS, MASS.

02161

OCTOBER 1977

B.N.L. Contract No. 419 929-S

Prepared for the Solar Technology Transfer Program

at Brookhaven National Laboratory

and supported by the Solar Division

U.S. Department of Energy

73

N.E.E. Solar Water Teaers V-4

TABLE IV-B TROUBLE ANALYSIS

CODE TYPE OF TROUBLE TOTAL COUNT TYPES OF SYSTEMS
OF SYSTEMS AND COUNTS OF TROUBLES EXPERI- Anti- Drain- Drain- Heated Air ENCING frz. back out Pipe
THIS ONE OR
MORE TIMES

The Florida Solar Energy Center (FSEC) has, under contract
to DOE, identified a number of solar users in Florida and completed a preliminary survey as to the experiences of these solar
consumers. The work was undertaken as part of an effort by elements in the DOE to develop a consumer protection package
to support solar demonstrations and commercialization efforts.
The experiences of some 522 solar users are described in a
May 18, 1978, Letter Progress Report from the FSEC to the DOE.
Attachment D to that letter presents the findings. The letter
and the attachment are appended to this memorandum.

RESULTS

In general, solar consumers reported that they were
satisfied with their systems:

Satisfied Mixed Unsatisfied
67% 21% 12%

However, a large number of the respondants reported problems
in the operation of their solar systems:

Total Number of Owners Estimated Number of Owners
Reporting Major and Minor W'ith Major Problems
Problems
239 (46%) 22%

36-734 0 79 6

76

A major problem is defined as one which (a) costs more
than SS of the initial system cost to repair, Or (b) took more than 15 days to correct, or (c) was greater than that experienced with equivalent systems using traditional energy sources.

A survey of 216 of the owners revealed that 111 reported
that the problems with their solar systems had not been corrected yet. 111 represents 46% of all the problems reported.
An owner's satisfaction level was not a reliable indicator of whether or not the solar system had experienced problems. For example, 28 owners were satisfied despite the fact that their systems had frozen and 10 owners were satisfied even though their units had suffered sensor failure.
The FSEC survey found that most of the problems occurred* soon after installation, and almost 80% within one year of purchase. While over 80% of the systems were installed in or after 1974; and over 50% in 1977 and 1978, about .15% were installed prior to 1960.

In accordance with Cooperative Agreement EH-77-F-01-8140 between the Department of Energy and the State of Florida (Florida Solar Energy Center), attached is Letter Progress Report #4 on the subject project.

An invoice of costs incurred on the project is being forwarded to your office from the Division of Sponsored Research at Florida Technological
University.

Since Letter Progress Report #3, we have made significant progress on the
various tasks defined in the work plan. These are discussed below.

Summary of Activities and Results

Contact With Agencies (Federal, State, Local, Private) Related to the Project:
The response to our efforts in establishing contact with agencies with interests related to our project has been described in Appendix A of Letter Progress Report #3. About 20 complaints were received from these agencies, and
an analysis of these complaints is attached as Appendix A to this report. These complaints have been in the area of misrepresentation of system performance and in the sale of franchises, distributorships and dealerships; improper installation;
inadequate repair service; and the vendor, going out of business.

Identification of Solar Consumers:
As described in Letter Progress Report #3, efforts in this task have
been continuing. We have now identified over 1,000 solar users in Florida, and a preliminary breakdown of the sources for information on these owners is shown in Figure 1.

The techniques used in owner identification were described in Letter
Progress Report #3. Substantial efforts to advertise the "hot line" were performed, and a brief description of typical efforts associated with advertisement of the hot line is attached as Appendix B to this report.

Analysis of the Problem:
The letter and postcard shown in Appendix D of Letter Progress Report #3
were mailed to all identified solar users. The letter inquired of the interest of the solar user in cooperating with us on the project, and only 3 out of all users identified expressed an unwillingness to share their experiences. The postcard instructed users to assess their experience and report it to us as "Satisfactory," "Unsatisfactory," or "Mixed." A tabulation of the responses received for 950 users is shown in Appendix C. The data of Appendix C represents the solar oumer's own

79

assessment of his experience as Satisfactory, Unsatisfactory, or Mixed, and such an assessment is, of course, highly subjective. To obtain additional insight into the meaning of these terms, we performed a detailed analysis of the hot line data points and also in-depth telephone discussions with about 65 owners. These 6S users were selected from the pool of names that had already contacted the Center via the postcard.

All owners that called the Center on the hot line were asked a set of
questions on the form attached as Appendix F to Letter Progress Report #3. Some 500 of the responses to these questions have now been analyzed, and the results
are shown in Appendix D to this report. Approximately three out of every four solar owners calling the Center indicated they were satisfied with their solar experience.

The in-depth telephone discussions conducted were designed to probe and seek various pieces of information that would enable us to draw experience profiles of Satisfactory, Unsatisfactory, and Mixed solar users. In our categorization, we attempted to.determine whether the owner had a significant problem. The findings are attached as Appendix E to this report.

We defined a significant problem as one which:
a. Cost more than S percent of the initial system cost to repair, or
b. Took more than IS days to correct, or
C. Was greater than that experienced with equivalent systems using
traditional energy sources.

We have been able to obtain the following profiles: Typically,
an owner reporting his experience as Satisfactory has not had significant
problems;
an owner reporting his experience as Unsatisfactory hA_had -icant
problems;
50% of the owners re sorting their experience as Mixed have had significant
T
pr eM-5-Although there are exceptions to these profiles, they are relatively few,
and our sample size was large enough to justify these profiles within reasonableerrors.

To define the consumer problem, we need to assess both its magnitude and also the nature and causes, of the problems. The data in Appendix C indicates that 12% of the owners have assessed their experience to be Unsatisfactory, and 21% assessed their experience to be Mixed. Using this data and the above profiles, we
estimate that about 22% of solar users have had significant problems. This represents the magnitude of the consumer problem.

To understand the nature and causes of the consumer problem, reference is again made to Appendices D and E, which deal with the hot line data and the in-depth
telephone discussions, respectively. To date, we have been able to identify 5 major problem areas. These are: .
Installation Problems
Inadequate System Performance
Inadequate or Unsatisfactory Repair Service
Unsatisfactory Information Provided By Vendor
Unsatisfactory Redress Action

80

For each of these problem areas we have identified some typical problems
encountered and suggested some causes. These are shown in Ap?endix F to this report. Our data suggests that if the owner's description of his problem and experience is correct, it is relatively easy to identify the nature of the problem; it is extremely difficult, however, to determine the cause of the problem. The difficulty is compounded by the fact that the discussions and probing have taken place over the telephone, and thus personal assessment of the solar system, the installation,
and the information provided by the vendor has not been made. It is evident from Appendix F that an identified problem can stem from a number of deficiencies. Conpon _-nt failure, for example, may be a result of inadequate operating or maintenance instructions, or may result from poor system or component design. An assessment of the adequacy of instructions would require either personal inspection or more extensive questioning of the owner. Thus, without additional information, there remains uncertainty as to the exact cause of problems identified by our solar experience information.

We have determined that in order to gain certainty about the nature and causes of the consumer problem, we need to expand our 5 problem areas to include
more specific ones and accurately assign a cause, or causes, to each. To accomplish this, an in-depth structured survey of the 1,000-plus owners identified needs to be performed, with possible field visits to establish confidence in the survey results. Unfortunately, the detailed survey and field visits are beyond the scope of this project.

Consumer Problems In Other Industries:
For comparative purposes, a search was initiated for information on
studies and surveys in the heating, ventilation, and air conditioning industries
which could yield consumer satisfaction levels with technologies analogous to solar, problems encountered with these technologies, and indicate industry interface with consumer protection mechanisms and systems. Industry associations, trade associations, manufacturing firms, research institutes, and other organizations were contacted for this information. This search proved disappointing for all industries except the heat pump industry. Relevant data concerning the heat pump experience is attached as Appendix G. On the whole, we have determined that there is a critical
shortage of data available to the public pertaining to consumer experiences in other fields. Information surveys conducted by private firms on product performance and acceptance are treated as proprietary by the firms involved.

Solar System Contact Groups:
We have prepared a final draft of the task report identifying the contact groups for the solar consumer. The original scope of the work statement has been expanded here to include not only the industry contact groups (manufacturers, distributors, dealer/ install ers, architects/engineers, builder/developers, etc.). but also informational contact groups, such as industry advertisements, press reports, periodical and government information sources. These must be considered as part of the solar industry infrastructure in that they contribute to the consumer's decision, his expectations, and his ultimate satisfaction or dissatisfaction with solar energy systems. Additional details are provided in the task reportAppendix H. DOE is requested to carefully review Appendix H and return their comments within 10 days of receipt of this document.

Workshop:
Approximately 360 individuals were invited to the Solar Energy Consumer
Protection Workshop in Atlanta, Georgia. After mailing of the Preliminary Announcement to these invitees, numerous telephone calls were made to specific individuals

81

in an attempt to get a balanced attendance, geographicallY and with respect to
consumer organizations, industry representatives, government offices, state energy offices, public utilities, etc. There were 113 participants w'ho attended the May 3-6Workshop. The Preliminary Announcement, Final Agenda, and Guidelines for Workshop Chairmen and Discussion Leaders are attached as Appendices I, J, and K, respectively. Additionally, to provide the participants with the relevant background information on solar heating and cooling technology, a brief summary on the status of solar heating and cooling was also ?repared. This is attached as Appendix L to this report.

We are presently awaiting receipt of the transcript of the proceedings of
the Workshop. Further detailed analyses of the recommendations will be made after reviewing the transcripts. It was evident, however, from the final plenary session, that the participants were almost unanimous in their conclusion that new and alternative consumer protection mechanisms are not needed, but that existing consumer protection mechanisms should be utilized and made more effective. This may require enforcement and, where necessary, provision of adequa:e budgets to support such enforcement.

Consumer Protection Mechanisms:
For purposes of the Workshop discussion, we identified the 8 most important existing consumer protection mechanisms. These are: (1) Standards, Testing,
Certification and Labeling; (2) Trade Licensing Laws and Training Programs;
(3) Building Codes; (4) Consumer Education/ Information; (3) Federal, State and Local Consumer Protection Laws; (6) Warranties; (7) Utility Regulation; and (8) SelfRegulation by Trade, Industry and Business Groups. Detailed descriptions of each of the 8 mechanisms were prepared, along with suggested criteria for evaluating the effectiveness of these mechanisms. (The Descriptions and E-.aluation Criteria are attached as Appendix M.)

In addition, a brief description was prepared for each of the following consumer protection mechanisms: (1) Disclosure Statements; (2) Bonding; (3) Common Law Remedies; (4) Better Business Bureaus; (5) Consurer Action Panels; (6) Mediation-Arbitration; and (7) Information Dispute Settlement Mechanisms. (This is attached as Appendix N to this report.)

Progress With Respect to Work Plan and Upcoming Plans

Wfe have completed a final draft for your review (attached as Appendix H) of the section on industry infrastructure and solar system contact groups.

We have gathered significant information on the .agnit-ude of the consumer
problem. Our data reflects owner assessments of the nature of the consumer problem, and from our knowledge and experience with solar sys--?e.s and solar users, we have identified a range of possible causes associated with the problems identified. We have categorized those problems most frequently occurring and identified mechanisms which will address these problems.

We have held a national ly- attended, and successful, Consumer Protection Workshop in Atlanta and explored the mechanisms and issues involved in consumer protection and evaluated the effectiveness of existing consumer protection mechanisms. The transcripts of the Workshop will be available within 30 days and will be summarized in a future Letter Progress Report. Detailed Droceedings of the Workshop are also planned.

82

In verbal discussions with the Technical Project Officer we have agreed that the strong consensus of the Workshop participants was that new consumer protection mechanisms are not required, or necessary. The project staff will therefore not attempt to develop new mechanisms. We agreed that present mechanisms which address different facets of the consumer problems experienced, in aggregate, constitute a consumer protection system. The system itself thus consists of mechanisms which may be integrated into the system, but Which often are effective as a consumer protection mechanism independent of their application within a system. By putting together existing mechanisms in alternate structures, new or alternate consumer protection systems can be examined.

We will now examine the application and integration of existing mechanisms into consumer protection systems. We will determine if there appears to be gains made through systems of consumer protection over application of existing independent consumer protection mechanisms.

We will attempt to determine improved strategies for implementation of
existing mechanisms and systems, and determine the ccsts and legal and administrative barriers to program implementation.

Potential Problems

We anticipate serious difficulty in assessing the true costs of implementing the strategies for more effective application of consumer protection mechanisms
and systems. Such costs should include not onlv direct administrative costs of such Programs, but also costs reflected in industi-,y as a result of the programs
and how such programs affect solar equipment costs. We rust also assess the impact on both solar market and solar industry development.

83

(FOR REVIEW ONLY)

FSEC Toll-Free Telephone Line

Results to Date

Steven R. Sin

Present date: April 21, 1978

Begginning date: January 11, 1978

(The total number of days the phone has been in operation is 73. The phone operates from 9 a.m. to 6 p.m., Monday through Friday.)

Results to Date

(A) Number of Calls Received and Owners Located:

Total number of calls received: 910
Total number of solar owners identified: 522
Percentage of total calls which come from
owners: 57%

Comment:

All efforts to publicize the toll-free line have stressed that the line is for the sole puropse of allowing solar ow-ners to call the Center and inform us of their experiences with their solar equip-:nt. This type of publicity has greatly increased FSEC's ability to attract oly solar unit owners to use the line. By comparison, the Natio-al Solar Heating and Cooling Information Center's (NSHCIC) toll-free phcne line is advertised as an informational line. The NSHCIC es-imates that only 10% of their calls come from solar equipment owners.

(1) The residential sector accounted for app:o:xiately 97% of the units as was expected. However, the domestic water heating application produced a smaller percentage than expected with only 55% (80% D W only and 5% DH. and PH) reporting that their primary syste= application was domestic hot water.

84

FSEC Toll-Free Telephone Line continued

(2) A result hidden in the above figures is that 99 of the owners contacting the Center via the toll-free line .ndica:e! :hat they had either built and/or installed their units thei-selves. This means that 19%, or approximately 1 out of every 5 owners wno s, were not involved in a "basic" market transaction in wh~cthe owner purchases an already-constructed unit and has it installed by persons other than himself.

(3) In the residential sector, all but 8 units were installed in houses. Six of these eight installed not in houses were installed for individual apartments, condominiums, or townhouses. One was in a bile home and one was in a park service outpost.

(4) In the pooling heating application, all but three were residential installation.

(1) A higher percentage of owners contacting the Center via the Hot Line indicate satisfaction than does the entire sa-ple of Owner experiences collected by the Center through all so r:s: Pot Line, letter, warranty cards, etc.

(2) The total number of owners indicating ;rz ces, major and =inor,

85

FSEC Toll-Free Televhone Line continued

is 239 or 46% of all reporting ourners.

(3) Of the 98 units installed from 1900-1974, 64 reported no
problems and 25 reported problems but satisfied for a total of 89 out of 98 or 91% satisfied. (With the older units the most common, reported problem was rusting of tanks necessitating tank replacement. In general
this rusting did not become serious enough to warrant replacement until 15 years or more after installation.)

(4) Of the 99 owners reporting that they had built and/or installed
their units themselves, 29 reported problems but only 13 would admit that they were unsatisfied or mixed with their units.

(5) In the "Problems but Satisfied" category, the following specific problems were most frequently mentioned:

Problem No. of Cases

*Freeze..ups 28
*Sensor 10
Leaking 9

Thus out of 52 total freeze-up cases reported (see Section G), 28 of these owners (or 54%) indicated that even though their units had experienced a freeze-up,. they were still completely satisfied with the unit!
*Note: Some owners reported both sensor failure and a freeze-up in this same category.
Also interesting is that of 16 owners who either built and/or installed their units themselves (and who were thus probably much more aware of the internal workings of the system than the average ownerwould be) and who also reported a freeze-up, 7 reported they were completely satisfied with their units.

(6) In thetProblems -and Unsatisfied" category, the following breakdown of unsatisfied cases by system application is possible:

System Application ,No. Unsatisfied Percent of Total Aoolication

DHW 29 7%
PH 23 47%
Space Heating 4 31%
Space Cooling 12 86%

(7) In the "Problems and Mixed" category, the following breakdown of mixed cases by system application is possible:

System Application No. Mixed **Percent of Total ApDlication

DEW 40 10%
PH 5 10%
Space Heating 2 15%
Space Cooling 2 14%
*Note: 7 cases in this category fell into the DUW and PH classification and are not included in this tally.

86

FS-C Toll-Free Telephone Line continued

In this category the specific problems most frecUently =enrioned were:

Problem No. of Cases

Freeze-ups 11
Poor installation 5
Not heating to expectations 5
Note: Thus out of 52 total freeze-up cases, 39 owners e:eriencing this
problem report that they are not unsatisfied with their unit
because this problem has arisen.

(8) The final breakdown by application and experience is as follows:

Aolication Z Satisfied % Unsatisfied % Mixed

DHW 83 7 10
PH 43 47 10
*** Space Heating 54 31 15
*** Space Cooling 0 86 14
*** Note: With only 13 space heating and 14 space cooling cases reported,
these figures are too low to present enough data to -ake the
percentages for these two applications anin.gful is a statistical sense. The important point to be gleaned here is that not one solar space cooling unit owner reports satisfaction.

(E) Time After Installation Until Problem Occurred:

Out of the 239 cases indicating problems, many o--..ers were unsure of the exact length of time after installation when the problem surfaced. lany owners would not even hazard a guess as to this time period. The
following information was obtained from those 213 owners indicating a reasonable certainty of the length of time involved.

Length of Time After Purchase Total No. of Cases Renortin. Reasonable
That Problem Occurred Certainty of Time Period (,)

Most of the cases reporting problems within one year reported that the problems occurred immediately after installation.

(F) Time After Problem Arose Before Corrected

Out of the 239 cases indicating problems, many ou--r.ers were unsure of the exact length of time after the proble-s arose before the p:-ble= was corrected. Many owners would not even hazard a guess as to this

87

FSEC Toll-Free Telephone Line continued

time period. The following information was obtained fr-= 216 o-ners indicating a reasonable certainty of this length of ti-c. These o-ners are not the identical group reported in the previous section.

Length of Time After Problem Total No. of Cases Resorting Reasonable
Arose Before Corrected Certainty of Ti-e Period (%)

Although the owners of units whose prcbler.s have noat been corrected will be able to answer with total certainty the cuestica of Vhen their units' problems were corrected," and thus =ight have a slightly higher percentage in this category because of this certainty, the number of uncorrected cases is unexpected. This number is 46% of the total number of problem cases reported.

(G) Tynes of Problems Most Often Reported:

(Total number of cases reporting problems:
239, some of which reported more than one ;rblem.)

Forty operating solar systems funded by the Department
of Energy were reviewed from a performance basis. Preliminary results indicate a high percentage of operating problems. The
review includes residential and commercial installations covering
active air and water systems.

The following represent the Subcommflittes efforts iii conducting at survey of solar energy consumers in the States of Michigan, WVisconsin and (Xiii foriai.
The Subcommittee was assisted in th esurvey by the California Energy Comnmission and the Mid-American Solar Energy Complex. These organizations provided names., of individuals who, have solar equipment inistalled1 in t heir houmes or businesses, and helped distribute the questionnairess to them. The Subcommllittee is very grateful for this assistance.
The Subcommittee also wishes to express its gratitude to two organizations who were instrumental in assisting in formulating and tabulating results of the questionnaire. The Congressional Research Service, ini particular MNr. Dan Melnik, Government Division, contributed greatly to the effective design of the* questionnaire. The House Information System provided all computer services in tabulating the questionnaire results. Mr. Hillel Sukenik of the HIS professional staff assisted in the design of the final computer output and the formulation of tables and graphs. His participation in this project was invaluable.
The results of the questionnaire have been used extensively to illustrate various topics in this report. The questionnaire contained 77 questions, of which 74 were tabulated by the Subcommittee. A total of 781 questionnaires were sent out; 336 valid responses were returned to the Subcommittee. The questions were designed to measure consumer experience and satisfaction with active solar energy systems.
(89)

The Committee on Interstate and Foreign Commerce of the United States House of Representatives has significant responsibility for making laws relating to the environment of our Nation and our sources of energy. Because of the vital importance of this problem and the need to focus on solutions, the Subcommittee on Oversight and Investigations of that Committee has decided to study the way private citizens currently use solar energy equipment. While only a limited number of privately owned solar systems are now in use, the Subcommittee feels that this source of energy has great potential for contributing to our Nation's welfare.

In line with the Committee's jurisdiction, we are concentrating on the commercial aspects of the use of this technology. As an owner of a solar collector, you can make an important contribution to our efforts by sharing your experience with us. As with any new technology, there is considerable potential for inadequacies in equipment, misunderstandings between buyers and sellers, and unsatisfactory commercial conditions. The danger is that these problems might work to defeat the promise of solar technology. The information you provide on the next pages will be used as a basis for adopting government policies to insure that solar energy users are able to buy and use their equipment in a fair market.

The identification number on the upper right hand corner of this booklet has been affixed to help us administer the questionnaire. Please have the member of your household most knowledgeable of your solar energy systems complete the questionnaire. Your answers will be treated as confidential by the staff and Members of the Subcommittee and only used for statistical analyses.

Q2. Which of the following aspects of owning solar energy equipment have
you found to be the most rewarding? [Circle one answer only]
1 THE CONTRIBUTION I AM MAKING TO A CLEANER ENVIRONMENT --- ---- 10 .7% 2 THE AMOUNT OF ENERGY I AM SAVING FOR THE NATION ------------- 27.2%
3 THE MONEY I AM SAVING --------------------------------- 43.1%
4 THE TROUBLE FREE OPERATION OF MY EQUIPMENT ----------------- 6.4%
5 THE WAY MY EQUIPMENT HAS BEEN SERVICED -------------------- .6%
6 OTHER [Please specify] 6 .1%

Q3. How frequently have you had problems with your equipment?
(Circle your answer]
I EVERY TIME IT IS IN USE -------------------------------- 1.2%
2 MOST OF THE TIME -------------------------------------- 2 10'3 SOME OF THE TIME -------------------------------------- 11:676
4 ONLY IN THE FIRST SIX WEEKS AFTER INSTALLATION -------------- 12.5%
5 RARELY ---------------------------------------------- 39.9%
6 NEVER ---------------------------------------------- 32.0%

Q4. Which of the following aspects.of owning solar equipment have you
found to be the most troublesome? [Circle your answer]
1 LOCATING RELIABLE EQUIPMENT TO BUY ----------------------- 9.4%
2 HAVING THE EQUIPMENT INSTALLED -------------------------- 6.6%
3 MAINTAINING THE EQUIPMENT IN RUNNING ORDER ----------------- 10.9%
4 DEALING WITH COMPLAINTS FROM MY NEIGHBORS ------------------ .6%
5 OTHER [Please specify] 7.6%
6 OWNING SOLAR EQUIPMENT HAS NOT BEEN TROUBLESOME ------------- 64.0%

36-734 0 79 7

92

Next, we would like to know what your experience was when you purchased your solar equipment.
Q5. Before you decided to buy your equipment, which of the following sources
of information did you use to learn about how solir energy systems work?
Did you use this source?
I [Circle your answer]
1 A friend or neighbor ..................... USED ----------------------- 26
2 A dealer in solar equipment .............. USED ----------------------- 61
3 A home builder ........................... USED ----------------------- 19-9%
4 The previous owner of the'property ....... USED ----------------------- 2.2%
5 A real estate salesman ................... USED --------------- ------- 5.0%
6 Solar fair or exhibition ..................... USED ---------------- ----- 37.6%'
7 State agencies ........................... USED ----------------------- 17,8%8 Other Government agency..* ................ USED 16'2%
9 An advertisement on radio or TV ........... USED ------------------------ 5:0%
10 Any other advertisement .................. USED --- ---- --- ---11 Magazine or journal article .............. USED ----------------------- .9%
7. 56. 5%1

Q9. At the time you purchased your system, were you planning to take
advantage of tax credits or cash rebates to defray the cost of your
purchase? [Circle your answer]
------------NO Go to NEXT page, 43.1%

2 YES begin question 141 - - - - - - S6.6%

,QlO. What kind of assistance were you planning to use?
[Circle one answer only)

Every one should answer the following question.
Q14. Before installing your solar energy system, did you take any of the
following measures to conserve energy in your home?
I Did you do this?
[Circle your answer]
I Added insulation to attic....................YES ------------------66 20
2 Added insulation to walls....................YES ------------------ .5
3 Installed weatherstripping around doors or windows ................ *...........YES ------------------47.6%
4 Installed insulation around hot water pipes .................................YES ------------------44.1%
5 Installed insulation around heating ducts*.. .....................................-Y37.9%
6 Installed storm windows ...................... YES ------------------21.9%
7 Other [Please list]